Since 30th November 2015, whilst still recovering from the horrific terrorist attacks, Paris has been hosting the COP21 Climate Summit with at least 80 government leaders from all major nations across the world in attendance. Together, they will set the scene for the final Paris Agreement, to be concluded on 11th December.

The fact that this year’s COP (Conference of the Parties) has started with the government leaders meeting instead of at the conclusion of negotiations is promising. As long as the world leaders in attendance (including Obama, Xi Jinping, Modi and Putin) get the Summit off to a good start, it could lead to a long-term 2050 goal, a five-year review cycle, the launch of carbon pricing, more clarity in financing mechanisms and maybe even the inclusion of non-state actors which could reduce political influence in future developments.

Preparatory work on the Paris Agreement has been intense but has left a large number of issues that are still to be decided which means that the success of Paris will depend greatly on the ambitions of the government leaders.

There is considerable optimism amongst industry leaders who believe that this will be a watershed event in climate policies. It is widely believed that climate talks have never before been in such a promising position. The optimism is in part quantified by the numbers; 174 of 196 countries submitted action plans stating their Intended Nationally Determined Contributions (INDC). The aggregated pledges deliver the best result ever. The current pledges, if kept, would lead to a 2.7°C temperature rise. Whilst this is not the best outcome it is quite an improvement compared to the 3.6°C that would result from all present policies and also on the 21st century temperature rise prediction which was 4.8°C.

Notwithstanding this, we still need to bridge an emissions gap equivalent to 9 billion tonnes of CO2 by 2025 to not exceed the 2°C threshold. It is highly unlikely that this will be resolved in Paris this year.  It is, however, hoped that they will agree on how to get on track to achieve the 2°C emissions target in the longer term but is not something that can be accomplished by delegated negotiators, only by the political leaders.

The Green Climate Fund, which was established from an agreement reached in Copenhagen in 2009,   is also high on the agenda. It requires developed countries to provide finance of $100 billion a year for mitigation and adaptation measures in underdeveloped countries starting in 2020. At the beginning of November 2015 only $10 billion had been pledged but the Green Climate Fund is expected to be driven forward in Paris. With many developing nations submitting their plans on how funds will be spent, this reduces the uncertainty that until now has delayed pledges. That said there is still a long way to go and with the actual investment required being trillions of dollars, progress on this is vital to secure the future of developing countries.

A third significant discussion point in Paris could become a real breakthrough if states and non-state actors; such as cities, businesses and other groups, could agree on how to proceed together. Whilst the government leaders have a critical role, businesses and cities have a large part to play too. Earlier in November, the World Business Council on Sustainable Development reported that its nine low-carbon business partnerships could achieve over 60% of the emissions reduction needed to get on track with the 2°C target. Although businesses and cities do not take part in the negotiation process, it is important that the Summit embraces their commitment and respects their role in achievement.

A huge step towards integration of state and business efforts would be made if world leaders were to adopt a favourable position on carbon pricing. Sixty two countries, including the UK, have already implemented carbon pricing mechanisms, covering around 12% of all greenhouse gas emissions across the world and over half of the INDCs give consideration to such mechanisms. Currently, carbon pricing and market-based mechanisms have a small role in the Paris Agreement but there are other pressure groups pushing for more carbon pricing mechanisms including a high-level Carbon Pricing Panel which has been initiated by the OECD, IMF and World Bank. It therefore can be said with some certainty that, even after Paris, carbon pricing will remain a prominent discussion point.

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