IIGCC BLOG

New draft agreement a bold proposal for an ambitious, investment-grade Paris agreement

After a six hour delay, the President of the COP released a bold new draft text to negotiators late in the evening of Thursday 10 December. Talks then resumed to continue throughout the night once again. IIGCC responded rapidly to the media and issued a longer statement today because the next few hours in Paris will be decisive. Agreement on Saturday remains a clear ambition of the French presidency and at this point still seems within reach. To that end a new compromise proposal is expected to appear early tomorrow (Saturday) morning.

The president of the COP is proposing to have most of the main substance of the text within the legally binding agreement rather than the politically binding decision. They will thus form part of the international treaty rather than just the decision reached by the UN. There are several main elements to this:

The objective of net zero emissions in the second half of this century and the early peaking of global emissions is part of the agreement. Furthermore, the President is proposing a temperature target of far below 2 degrees, or 1.5 degrees. There will be a global stocktake in 2023 to assess the effectiveness of the agreement and its implementation. INDCs will be updated every five years. Post-2020 climate finance arrangements have been kicked down the road to the next climate summit in Morocco at the end of 2016, although this agreement establishes the principle that future climate finance flows should be higher than the USD 100 bn objective set out for 2020.

The ambition for 1.5 degrees is not something expected before COP21 but has come from an alliance of countries previously considered unlikely to join forces that has been led substantially by the Marshall Islands, one of the most vulnerable island states. (For more information.)

With respect to some of the specific investor asks set out well before the talks (e.g. in letters to the G7 and G20) and vocally during COP21 (at our own and other events held by our partners), there are some other good things about this text. Each INDC will be a progression from previous efforts (so there can be no backsliding). This latest text also includes a suggestion that countries should voluntarily develop long-term low-emissions development strategies that will make the stated global long-term goal of net zero emissions operational on a country level – providing a critically important signal to investors that will demonstrate the pace and scale of decarbonisations at high resolution (country level).

What unfolds amongst countries over next 24 hours will be crucial as Parties respond to this new text inside the negotiating process. High levels of confidence in the French COP Presidency bode well for a mandate for the chair to further streamline the text and present a clean text on Saturday morning. It remains the case that a meaningful agreement is possible. However there are risks that hard negotiating could result in the removal of certain pieces of wording that are important for investors.

New draft of the Paris agreement keeps door open to climate-secure world

A new draft of the Paris Agreement released today at 15.00 CET maintains all the ingredients necessary to deliver an effective and ambitious Paris agreement.

This latest negotiating text has been brought together by the President of the negotiations (French foreign minister Laurent Fabius) and the key facilitators, reflecting concerns of all Parties. What began on Monday as a 48 page document has now been cut to just under 30 pages.

The purpose of this effort is to narrow the focus of discussion and expedite the closing stages of the negotiations. It’s well known that Mr Fabius wants no-one to propose new text tomorrow – only deletions - and a final agreement nailed by around 6pm on Friday. So it’s now crucial that the Parties regard this proposal by the Chairs as a basis for negotiations going forward. As yet it has not been possible to hear responses from the Parties – that conversation starts this evening.

In the background, certain countries are seeking to underpin momentum with a series of announcements. For instance, the US has promised to double its aid for climate adaptation in vulnerable countries to USD 860 million.

Encouragingly, a long-term goal is still within the text and so remains firmly on the table despite the opposition from certain oil producing countries. However, the effectiveness of any wording in the final agreement will depend on how clearly Parties agree on their collective ambition: either as a quantitative global emission reduction goal or as a long-term qualitative commitment to decarbonisation, energy sector transformation or ‘net zero emissions’ by an agreed date this century. A decision on which of these choices ends up in the Paris Agreement still has to be made.

The clear division or ‘firewall’ between developed and developing countries set out in Climate Convention remains another key issue. Developed countries are still pushing for a dynamic outcome from Paris where emerging economies agree to do more to curb their own emissions as they become richer. India continues to resist this principle.

The other hot issue for negotiators remains that of climate finance. The new text shows there has been some progress on this: All Parties appear to be converging towards wording that will establish a goal for USD 100bn by 2020 as a minimum ‘floor’ from which to scale up going forwards.

Agreement on temperature target of 1.5 degrees within reach

Ministers from around the world are now engaged with negotiations to forge an agreement in Paris. To set a definitive tone and help accelerate the pace of discussion the President of COP 21 – French foreign minister Laurent Fabius - established the ‘Paris committee’. Under this process the President of COP 21 devolves discussion into four key strands, each facilitated by two countries:

•Support (means of-implementation for finance, technology and capacity building) - led by Gabon & Germany

•Differentiation (mitigation, finance and transparency) - led by Brazil and Singapore

•Ambition (including a long-term goal and periodic review) - led by Norway and St Lucia

•Pre-2020 action: led by the Gambia and the UK.

In addition, every evening this team of eight and other lead negotiators meet to hear reports, take stock of progress and listen to interventions from individual governments.

Capturing media attention at the start of the COP or ministerial negotiations, UN Secretary General Ban Ki Moon called for a deal that includes a review of national pledges at five year intervals starting before 2020 and an energy revolution. Putin then surprised the world in general when he announced that Russia would not attempt to obstruct a deal in Paris. Meanwhile more good news came in the form of new research showing global emissions from fossil fuels and industry fell slightly for the first time ever last year (due to lower coal usage in China, growth in renewables and slower growth in petroleum).

In another significant development, a string of big carbon polluters - including China, the US, Canada, and the EU - expressed support for the principle of a 1.5 degree Celsius global temperature target. Whilst this tightening of the 2 degree target (agreed in Copenhagen and made official in Cancun) is a key demand from vulnerable developing countries, this change is opposed by India because they argue it will curb their ability to develop a modern economy by restricting India’s ‘carbon space’.

There is also considerable discussion running on the question of setting a phase-out date for fossil fuel usage aligned with a long term temperature goal. A timetable for a 1.5 degrees pathway would need to be ambitious, with some scientific research indicating this would require a fossil fuel phase-out as soon as 2030. Other options for the long-term target on the table include those of net zero emissions, a decarbonisation goal to be achieved over the course of the current century, or a commitment to energy sector transformation.

Negotiators and ministers are having to work more or less around the clock to resolve many issues. Nevertheless, the mood around the negotiations remains one of confidence in the process and a widespread
belief that a robust Paris agreement is looking, increasingly, to be within reach.

IIGCC’s Stephanie Pfeifer and some investors present at COP21 Finance Day feature in package recorded by Green TV for You Tube which to date has had over 11,000 views since it was posted at the end of COP21 week 1. You can view it here: https://www.youtube.com/watch?v=d0S4NZBUDhM&app=desktop

Nothing is agreed until everything is agreed – latest draft shows convergence between governments but ministers must work rapidly to finish in time available

The latest draft agreement for a text to be adopted at COP 21 published on Saturday 5 Dec shows negotiators have successfully found agreement on those issues they can resolve. Parties are broadly happy with progress made, and have decided to transmit to ministerial level the text from the working groups.

A number of developing and middle income countries, particularly small island nations, have been advocating to strengthen the global temperature goal from 2 to 1.5 degrees. There’s been some movement on this - the latest text now talks about either 1.5 degrees or significantly below 2 degrees. The EU and some others have sympathy with a tighter goal, but a final decision on this will likely only be reached in the final hours of the conference.

India has proved constructive. It’s now signalling flexibility on a principle that would prevent “backsliding” - each national climate plan should be a progression from previous contributions. Some other emerging economies have echoed this sentiment. In return, the EU has started to support publicly a goal to mobilise USD 100 bn for developing and emerging countries by 2020 and for this to then serve “as a floor” going forwards.

It must be hoped that the significant and diverse group of nations wanting an agreement with high ambition will continue to resist pressure from the ‘Least Cooperative Parties’ to surrender language referring to a long-term goal. Given the momentum now behind the low carbon transition it could be argued that this would do much to enable investor action at both the pace and scale required by science.

External momentum heralded by investors, businesses and cities as well as the leaders’ event held at the start of COP 21 are bearing fruit as government negotiators come forward with bridging proposals that reflect a spirit of compromise. At the same time, the credibility of the French Presidency remains high as countries continue to trust the process and fairness of the conference hosts.

Much work must now be done by ministers who arrive today (Sunday 6th December). However, already, there has been significant progress as governments demonstrate they are committed to reaching an agreement in Paris.