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Washington, DC is famous for its alphabet soup of government acronyms. Some of them have become quite famous--every gift shop in the city sells “FBI” and “CIA” shirts and hats. But in the coming weeks, there’s a new one that is going to permeate discussion inside the Beltway: NDC, or Nationally Determined Contribution. While nobody will be selling “NDC” t-shirts, it will quickly become an important topic for American businesses. Let’s take a look at what it means and why it matters so much.
On January 27, President Biden issued a comprehensive Executive Order 14008, titled Tackling the Climate Crisis at Home and Abroad, which, among other things, directs his Administration to develop a revised NDC for submission under the Paris Agreement, and to do so prior to the U.S.-hosted Climate Leaders’ Summit planned for April 22nd of this year.
Unlike an earlier climate treaty, the 1997 Kyoto Protocol, the Paris Agreement is founded on a “bottoms-up” approach in which individual countries are empowered to choose the emissions mitigation path that they find most appropriate based on their unique circumstances. Nationally determined contributions form the heart of this bottoms-up structure. Upon establishment of the Agreement in 2015, each of the more than 190 participating countries submitted their initial NDC (for example, President Obama committed the U.S. to reduce economy-wide greenhouse gas emissions by 26-28 percent below 2005 levels by 2025).
Under Paris, countries are expected to submit updated commitments every five years. While the COVD-19 pandemic delayed action in 2020, most of the world is now working to craft renewed NDCs that will detail post-2020 climate actions in their country. To date, 44 individual countries and the 27-country European Union bloc have submitted revised NDCs, with another 100+ expected to do so prior to the 26th annual meeting of the United Nations Framework Convention on Climate Change Conference of the Parties—or UNFCCC COP-26—in Glasgow, Scotland, later this year.
The Biden Administration has placed these efforts on a fast track, with an initial NDC announcement expected next month. Importantly, the President’s Executive Order specifies that U.S. NDC development should be accompanied by outreach to domestic stakeholders. The Chamber applauded the President’s decision to rejoin Paris, ensuring that the U.S. has a seat at the table for these important discussions. But we think it is vitally important that the Administration keep its commitment to engage in meaningful outreach with stakeholders, and there is no bigger stakeholder than the businesses that drive our economy. Therefore, in anticipation of forthcoming engagement with the Administration, we have recently developed a set of principles and priorities aimed at informing the Administration’s NDC effort.
We know the NDC development process will be complex and challenging, as will the broader international negotiations along the Road to Glasgow, but the Chamber is committed to leading business community efforts to ensure a successful outcome. To this end, our NDC Principles and Priorities document identifies the following eight high-level areas that we believe merit close attention by the Administration:
- Ensure business has a seat at the table
- Highlight U.S. businesses’ climate leadership and promote U.S. export opportunities
- Seek durability, credibility, and achievability
- Recognize the critical role of technology development
- Complement technology development focus with pursuit of policies necessary to accelerate commercialization and deployment of low carbon technologies
- Embrace an “all of the above” approach to emissions reducing technologies and pathways
- Seek balance that recognizes global context
- Study economic implications of potential NDC commitments
As the document details, each of these points are complex in their own right, but together they serve to support and advance our overarching objective, which states:
We are calling for reducing emissions as low as we can as fast as we can, while ensuring that any national targets and timetables are realistic, achievable, appropriately account for U.S. economic interests and work to address impacts to trade-exposed, hard-to-adapt and energy intensive sectors. We are hopeful that targets are developed through a thoughtful and collaborative effort that identifies a clear path to achievement and garners the support of businesses, consumers, and other stakeholders necessary to ensure political durability.
It is our hope that by engaging early and constructively in this process, the Chamber will be positioned to build consensus and ultimately enhance the potential for a realistic and achievable NDC to reduce GHG emissions, garner broad support, help restore U.S. credibility internationally, and ultimately prove politically durable.