Originally published in The European Lawyer, January 2010
As the dust settles over the UN climate conference in Copenhagen, many commentators have been left picking over the bones of the meeting in an attempt to understand the ramifications of what was actually agreed.
The Copenhagen conference was certainly an impressive event - some 45,000 people travelled to the Danish capital for the summit and passions ran high, with police and climate change demonstrators clashing several times. And there were even moments of entertaining high farce, not least the acknowledgement by the UK's energy secretary, Ed Miliband, that he made a late night dash between hotel and conference centre in little more than his pyjamas to try to salvage some sort of a deal.
Falling short
By all accounts the conference failed whole heartedly to achieve what it set out to - namely, that there is no legally binding agreement. At best there is simply recognition among world leaders that something has to be done to control an increase in climate temperature, but even on this point there is significant disagreement about what temperature needs to be controlled.
Some had hoped that the conference would set the stage for a successor to the 1997 Kyoto Protocol, leading to a legally binding agreement to reduce greenhouse gas emissions. Whilst from the outset most commentators had accepted that a legally binding agreement would not be reached, what was expected were commitments from countries to reduce their greenhouse gas emissions by specific amounts.
With so many countries involved, reaching a unanimous agreement was never going to be easy, but the 'agreement' that has been reached falls short of even the most conservative expectations of what was hoped would stem from the conference.
The accord is a US-led non-legally binding agreement between China, India, Brazil, South Africa and the US to tackle global warming. The accord recognises the scientific view that global temperature rises should be kept below 2 degrees centigrade, but fails to set out how this is to be accomplished. Instead, in a form annexed to the accord, the countries were required to submit pledges to reduce greenhouse gas emissions by the end of January 2010.
However, the accord does promise to deliver $30 billion of aid to developing nations over the next three years and establishes a goal for developed countries to deliver $100 billion of aid per year by 2020. But again, it fails to set out where this funding will come from.
The accord will be seen by many as a failure and indeed, if one focuses solely on the accord itself, such an interpretation would seem to be wholly inaccurate. To all intents and purposes the accord is a vague, non-legally binding agreement which, although acknowledging that global temperatures must not be able to rise above 2 degrees, does nothing to prevent it.
Silver lining
And let's not forget this deal has been struck between a select group of countries. It is not the all encompassing global framework and commitment that most had hoped for and, indeed, assumed would be forthcoming.
But, for those desperately searching for a silver lining among this dark cloud hanging over us, Copenhagen did produce an agreement of sorts and as part of the bigger picture, it should be viewed as an important stepping stone towards future binding agreements. Furthermore, the accord does provide for nations to commit to implement emissions targets for 2020.
There have also been pledges from a number of world leaders - including those in Europe - to turn the accord into a legally binding agreement.
Implications
What are the implications for investment in renewable energy and the cost of carbon? Given that the vast majority of investment is expected to come from the private sector, a key requirement of the conference was for businesses to be left with confidence and a clear sense of direction. On this promise, the accord has failed to deliver and instead we are left with uncertainty. Without a clear framework setting out specific carbon reduction targets, many businesses will be more reluctant to invest in clean energy.
This can be seen further in the carbon market, which, following the Copenhagen conference, appears to have stalled in the absence of a binding agreement. Settlement prices on the European Climate Exchange closed at €12.44 per tonne on 22 December 200, down from €13.34 on 18 December 2009, the final day of the Copenhagen summit. Whether this is a temporary dip remains to be seen.
Michelle Thomas is head of the clean energy and sustainability group at UK-based global law firm Eversheds, Jonathan Woodward is a trainee at the firm.
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