Lima deal paves path to pragmatic and imperfect Paris Treaty

James Murray
@James_BG
15 December 2014

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The denouement to the Lima Summit may have been wearingly familiar, but it raises hopes for a 'we'll do what we can' climate treaty that would deliver a major boost to the global green economy

Ultimately, it all ended just as you'd expected. The final few days of the Lima Climate Summit were as predictable, familiar, and derivative as a One Direction album. Early progress stalled, negotiations got bogged down on technical issues that even some of the diplomats in the room would admit in their darker moments they struggle to keep track of, the chair intervened and banged heads together, a compromise deal that pleased no-one was finalised after two nights of talks, the text was gavelled through by insomniacs in crumpled suits who vaguely resembled the ministers who started the process two weeks before, and then the spin operation began with some hailing historic success and others bemoaning an impending apocalypse. For Lima, read Cancun, or Durban or Warsaw, or indeed any of the cities that have staged the climate diplomacy caravan over the past 20 years.

And yet, this cynical characterisation of the UN talks, while technically accurate, misses something important. This year, like each of the years since the 2009 Copenhagen Summit, progress was made towards a new international climate change agreement, further signals were sent to the global business and investment community that climate action is now the norm, and a framework for a new Paris Climate Treaty was advanced. Amidst the fractious fallout from the on-going rows over inadequate climate funding and "common but differentiated responsibilities" it is crucial to remember these three points.

Watching from afar, one of the most notable aspects of the Lima Summit was the extent to which the key foundation for a Paris Agreement, already dubbed the Paris Alliance, are largely agreed and uncontested. The proposals that will see every nation produce climate action plans, or Intended Nationally Determined Contributions (INDCs) in the jargon, appear to have been accepted across the board. Instead arguments focused on how these INDCs will be monitored and whether developing nations should submit them on the basis of "common but differentiated responsibility" or "in light of [their] national circumstances" - a distinction that is crucial to those involved in the talks, even if any outside observer taking those words on face value would conclude they mean basically the same thing.

This consensus in favour of INDCs represents great news for green businesses everywhere. They may be voluntary and the precise contents of the plans may be vague, but the Lima deal raises the prospect of each and every country producing a climate action plan. Many of these national plans will be based on legally binding emissions reductions targets, while all of them will serve to mobilise increased investment in clean technology. It is notable that the name adopted for the Lima agreement, the Lima Call for Climate Action, foregrounds the focus on tangible climate action provided by these promised national commitments. This has to be seen as a positive development.

Moreover, the agreement around INDCs highlights the oft-forgotten truth of the UN climate talks: any eventual agreement will not magically reduce greenhouse gas emissions, it will only prove successful in so much as it provides a policy framework that serves to accelerate decarbonisation. The primary purpose of the talks is to provide this framework. There are other important and contentious purposes, ranging from strengthening global climate adaptation efforts and providing climate funding for developing nations through to acknowledging the "loss and damage" these nations will incur from climate impacts. But without action on decarbonisation these talks are nothing. It is in this respect national climate action plans are such an important step forward. Anyone doubting this fact should consider the huge increase in European investment in clean technology and the gradual reductions in emissions that have been achieved since 2007, when the bloc adopted an energy and climate action plan that was effectively a forerunner for the INDC approach.

Criticism of this strategy justifiably centres on the fact asking nations to present their plans for tackling climate change boils down to a "we'll do what we can" commitment. As numerous environmental campaigners have observed, we already know the INDC pledges that are in the pipeline will not go far enough and will still leave the world staring down the barrel of more than 2C of warming.

But "we'll do what we can" is not nothing. Rather it could represent the kind of long term global commitment to decarbonisation that green businesses have been craving. These long term commitments should help further mobilise investment and slash the cost of clean technologies to a level where governments feel comfortable strengthening their action plans still further. Just because the pledges initially contained within the promised INDCs will not deliver a 2C world does not necessarily mean that a 2C world cannot yet be delivered.

A "we'll do what we can" Paris Treaty may sound depressingly defeatist, but it is likely to contain within it a Chinese pledge to peak its emissions, an EU pledge to slash emissions 40 per cent, a US pledge to double the rate of its decarbonisation, and an Indian pledge to funnel billions of dollars into solar technology. Even two years ago, green businesses and investors would have bitten off the hand of any policymaker offering such a wide range of credible climate policy commitments.

Following the Lima Summit, the foundations for a Paris Agreement appear to be in place. It seems increasingly likely Paris will deliver a system of INDCs, coupled with a vague mechanism for monitoring and updating these national action plans that will inevitably be deemed insufficiently robust. I'd also predict some tangible progress on those parts of the negotiations where quiet improvements have been being made for several years, such as deforestation and carbon offsets. Most importantly of all there are hugely encouraging signs a bold new target for delivering net zero emissions will be discussed and could even be finalised, given the already agreed 2C target logically demands a long term emissions goal.

And what of the rest of the issues being discussed? The issues that once again proved too difficult for negotiators in Lima?

It is around this point you would expect the truckload of caveats that have to come with any upbeat assessment of the UN climate talks, and I am not about to disappoint. The distance that remains between the various negotiating camps on the topics of climate funding and measurement, reporting, and verification continue to look all but unbridgeable. Progress on technology transfer and the highly controversial topic of 'loss and damage' looks equally challenging.

If world leaders can be corralled into attending the Paris Summit they may be willing to move from the entrenched positions that their negotiating teams have dug themselves into over the years. But equally it is hard to envisage how nations can move from vague talk about how to mobilise $100bn of climate funding a year from 2020 to the formal plan developing nations want to see, particularly when a large chunk of that funding would be likely to come from politically toxic carbon taxes. Similarly, rich nations are simply not going to agree to as formulation around 'loss and damage' that leaves the door open for compensation claims, while China and India appear equally resistant to calls for robust independent mechanisms for measuring emissions. A Republican victory in 2016's Presidential election could see the whole process plunged into crisis, regardless of what happens in Paris.

These deep divisions, coupled with the inherent dysfunction of some of the negotiating procedures, will create a volatile cocktail that could see the Paris Summit collapse at any time. Even if a formulation is reached that commits nations to the new system of INDCs, delivers more action on climate funding, and resolves differences over the legal and technical details that would determine the success or failure of any treaty, the harsh reality remains that the world remains a long way from delivering the emissions reductions that are needed.

And yet, while it may not be enough, such a treaty would be an historic step in the right direction.

Not only do the imminent INDCs hold out the promise of tangible climate action, they also demonstrate the extent to which commentators and campaigners are wrong to suggest that next year's Paris Summit represents a be all and end all for the climate. The promised treaty is an enabling mechanism for decarbonisation, a means of making investment in low carbon infrastructure easier - and as such tackling climate change without it will be far harder. But a system of national climate action plans shows that with or without a treaty, the world's biggest and most influential economies are committed to green policies that drive low carbon investment. They are committed to phasing out carbon emissions and accelerating clean technology deployment. They are, for all their many differences, agreed on the need to transform their economies for the better. Just as they are agreed on the fact that this transformation can be made in a way they boosts health and living standards.

Businesses and investors need to realise that while the flawed nature of the UN talks may appear wearingly familiar, every year that the negotiations refuse to collapse further entrenches the global political consensus in favour of decarbonisation. A Paris Alliance, imperfect and insufficient as it will inevitably be, will further solidify that consensus. We will need to go further and faster, but Lima shows that governments around the world are more committed than ever to the climate action that is enabling a green business revolution.