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COP21: A Strong Political Message

Laurent Javaudin and Joachim Schleich, professors and researchers at Grenoble Ecole de Management, answer questions about the impact of the COP21 agreement. As energy specialists, they comment on the challenges that will arise from this agreement and how it could lead to innovation.

Does this agreement on climate change pave the way for innovation?

The agreement aims to maintain global warming under two degrees and to encourage efforts that will limit the temperature increase to 1.5 degrees. This is a priority for the most fragile developing countries.

The two goals are ambitious and require innovations that will replace coal, oil and gas with clean energy sources as quickly as possible. In particular, this means deploying renewable energies on a global scale. It is also essential to improve batteries and mass produce them at lower costs.

As a result, the agreement sends a strong political message to markets around the world guiding them towards investments in low-carbon emissions and new energy technology.

To create a snowball effect, companies need motivation to integrate restrictive measures. How will this be achieved given that the agreement does not include a global carbon price, which would help guide investments? 

The agreement does not include actual public policy. It is up to each country to implement the necessary measures that will allow them to reach their Intended National Determined Contributions (INDCs, or the climate actions countries plan to implement under the new international framework). The agreement has to help drive countries to outline clear and coherent policies that will reassure private investors. These policies could include carbon taxes or exchange systems with countries such as China or the E.U. region.

However, to achieve the agreement's goals, countries will have to be much more ambitious. They have to find ways to encourage renewable energy, battery-related systems or electric cars. Finally, the agreement opens the door to international carbon markets, which would create a carbon price.

What is the importance of the agreement's plan to review progress every five years and follow up on state commitments?

Science suggests that current INDCs will result in an increase of 2.7 degrees instead of 2 degrees (let alone 1.5 degrees). The review process provides a political framework to continue increasing goals for emissions. It is a crucial part of turning these efforts into a credible long term vision. Only time will tell how efficient the review process will be and whether or not it will send a strong signal to investors interested in carbon-reducing technology.

Limiting the global temperature to well under two degrees requires governments and businesses implement a slew of technological projects and economic initiatives. Could you highlight several promising projects that are underway in France?

While it is true that international agreements and national regulations provide a framework, the investment choices are really made by companies, people and local communities.

The Auvergne-Rhône-Alpes region, for example, has already launched numerous pilot projects such as Greenlys for Smart Grids or the HyWay project for hydrogen powered transportation.