On the third day of the Paris climate talks, BusinessGreen explores how an agreement could help reshape global carbon markets
Climate change talks in Paris appear to have moved a step closer to setting a goal to phase out greenhouse gas emissions by 2080, in a move that if agreed, could provide a long-term signal for businesses to invest in clean technologies.
The spin-off group on mitigation last night released an updated section of the draft text outlining ambition for a collective long-term goal for tackling climate change.
The group agreed to slim down the text produced from the most recent technical talks in Bonn in October, which contained three options on the issue of a collective long-term goal.
The new proposed text includes an option for countries to set a target to achieve "zero global greenhouse gas emissions by 2060 to 2080".
Businesses say setting a long term goal in Paris will be crucial for tackling climate change, as it would provide them with greater policy certainty as they invest in the clean technologies required to tackle climate change.
"It's critical to know where we're going on ambition in the long term," Dirk Forrister, chief executive of the International Emissions Trading Association (IETA) told BusinessGreen. "In the negotiation process, it's also about confidence building - by narrowing down the options, it shows incremental progress. We hope this will start to unlock other areas of the negotiations, particularly on the remainder of the mitigation section."
But it remains to be seen whether a target will be agreed in the final text. A number of countries are thought to be sceptical about the case for a specific target date for full decarbonisation, while there are also reports that the word 'decarbonisation' itself is being opposed by some key players. Time is ticking away and countries now have just nine days to reach a deal.
The French organisers of the COP have set a tough timetable for the first week of negotiations, demanding a new draft text is produced on Friday. The French hosts will then decide the next steps by Monday when the high level summit opens, bringing together environment and climate ministers from around the world.
A growing number of businesses are calling for the talks to back up a long term target with support for the growth of carbon markets, which advocates claim can help reduce emissions by requiring companies to pay for their pollution.
On Monday, heads of states from France, Chile, Ethiopia, Germany, Mexico and Canada, and the leaders of the World Bank Group and the International Monetary Fund called on companies and countries to start pricing carbon pollution as a key to combatting climate change and transforming the global economy.
Dr Celine Herweijer, a partner in PwC's sustainability team, said the Paris deal should deliver clarity on carbon pricing mechanisms in order to help create a level playing field between different markets.
"Businesses operating across borders under a patchwork of national policy and regulatory approaches to cutting carbon emissions, including the 62 carbon pricing schemes live or almost live, will need common carbon accounting and reporting standards to operate effectively," she said.
Meanwhile, a video released today by a coalition of industry groups highlights nine blue chips, including Aviva, Xerox and Sky, that are using a carbon price to help reduce their environmental impacts.
However, carbon market industry sources admit they are unlikely to get what they want from the eventual agreement when a number of more pressing political issues remain on the table.
"Carbon pricing is a tool that can be part of the solution," said Karl Upston-Hooper, general counsel of Finland's GreenStream Network, a carbon asset management company. "I don't think even IETA's most radical members would say it's the be all and end all. The Paris accord is not going to put a price on carbon... What we're doing here is enabling ways for a price to be put on carbon outside of this process and that price will be different in different places and they will use different policy instruments to do that."
He said specific language on carbon pricing proposed in the text currently is "all over the place" with some references placed in the pre-amble to the agreement and other parts scattered throughout the document.
However, he predicted that this year's final agreed text would pave the way for further progress on carbon markets at COP22, which is due to be held next year in Marrakesh, Morocco.
Many green businesses will be hoping that one of the first items on the agenda will be how to deliver on the new international target of achieving net zero emissions later this century.