Investors were cautiously optimistic today that the Paris climate summit would over the weekend yield a landmark agreement to tackle emissions.
After nearly two weeks of negotiations in the French capital, a fresh draft of the text was released, which includes an ambition to keep global temperature rises to well below 2°C above pre-industrial levels and aim for "climate neutrality" in the second half of the century.
Although many environmental campaigners howled in frustration at the vague nature of the text, many investors and businesses expressed optimism that, if signed off, it would send the right policy signals to trigger a new wave of investments to help the transition to a low-carbon economy.
"Institutional investors are cautiously optimistic about the climate agreement now emerging in Paris," said Stephanie Pfeifer, CEO of Institutional Investors Group on Climate Change, whose members have more than €13 trillion ($14 trillion) in assets under management. "The next few hours will be critical."
"Campaigners would of course like things to be more ambitious, but assuming the deal does go through, this will be the first time in history at which virtually every country has committed to restraining its emissions of greenhouse gases," said Richard Black, director of the Energy & Climate Intelligence Unit. "That alone marks this summit down as a very significant moment."
The draft text was released on Thursday night in the hope that an agreement would be signed off Friday. But despite negotiators working throughout the night, that deadline was missed, and a revised text is now expected to be released on Saturday morning in the hope it will be signed off later the same day.
Most climate summits fail to reach an agreement by the end of the second week and normally continue well into the weekend.
The highlights of the text released on Thursday are:
• a goal to hold a temperature increase to well below 2°C, with efforts to limit the temperature increase to 1.5°C;
• a commitment to "reaching greenhouse gas emissions neutrality in the second half of the century";
• the mention of allowing carbon markets to link, which is a major boost for those calling for a global cap-and-trade agreement;
• a five-year cycle for reviewing the targets which nearly all countries submitted ahead of the agreement.
"Most of the elements we want are on the table," said a spokesman for the World Resources Institute.
Think tanks CDP and We Mean Business urged governments to approve the text, saying it "delivers what business needs to accelerate the transition to a clean economy".
However, there is still the possibility the agreement will be subject to major changes, as the talks continue to be riven by arguments over which countries should foot more of the bill for the radical changes being called for.
But there has been some progress on the sticky issue of 'climate finance', with a previous aim of $100 billion a year flowing between rich and poor countries by 2020 set to be increased.
"The text is strengthening," said Celine Herweijer, a partner at PwC, specialising in sustainability and climate change. "The deal now clearly calls for warming well below 2°C, and effort to limit it to 1.5°C. This is a bold step-change in ambition and sets the tone for the scale of the low-carbon transition needed. Finance has also progressed, with $100 billion a year now as a floor for finance raising. The hope might be that this would create the ripple effect needed to unlock agreement on the remaining contentious areas including differentiation, loss and damage and compliance."
However, some campaigners were bitterly disappointed by the vague nature of the text.
"If this text indicates what will be agreed here, we will be left with a deal that fails humanity," said Lucy Cadena, Friends of the Earth International climate justice and energy coordinator. "This text dismantles the core foundations of the UN climate convention," Cadena continued. "The pillars of a just agreement – ambition and equity – have been completely undermined. After all the warm words of developed countries on a 1.5°C limit, the new text contains no obligation to stay under this threshold. Shockingly, the text could allow for carbon emissions to continue until 2099."
