CDKN's Sam Bickersteth and Kiran Sura take stock of the political fault lines in the run-up to next month's Paris climate conference.

With the Paris COP21 just weeks away old fault lines between developed and developing countries have re-emerged in the final preparatory negotiations last week in Bonn. The G77 + China came together, objecting strongly to the latest draft agreement which had excluded many of the options they had put forward previously. Specifically, references to a long-term global target, equity and a loss and damage mechanism were dropped – some of the key elements of a global agreement that will determine the severity of the impacts facing developing countries and their ability to deal with them. This led the South African Chair of the G77 + China Group, Ambassador Joyce Mxakato-Diseko to use  strong critical words.

A week of largely unproductive negotiations resulted in a draft agreement full of some 1,000 options for further negotiation. The sheer number of options in the text will present a challenge for the COP Presidency when they gather Ministers in Paris for pre-COP21 preparation 8-10th November and when the COP21 commences on 29th November. There is still much work to be done by negotiators, Ministers and heads of state.

A robust and ambitious emissions reduction goal needs to sit at the heart of the agreement, and it should be closely linked to finance to enable developing countries to move forward on their Intended Nationally Determined Contributions (INDCs) - the pledges they have submitted in advance of the Paris summit. Adaptation, technology transfer and capacity building are significant issues but ones that may be less controversial for international agreement. Applying the principle of ‘common but differentiated responsibility’ for tackling greenhouse gas emissions – long accepted by parties to the COP but difficult to put into practice and finance for climate action are proving to be much more challenging areas for agreement. Loss and damage is still sitting as an option in the text (an option to include it or not at all)  and risks in the end being a pawn in the final negotiations around other issues.

The INDCs are likely to be recognised as a successful process that has built momentum for change and catalysed national debate on low carbon development where done properly. If they are in some way inscribed in the Paris agreement, they may mark the start of a deep transformation in economic development. On the positive side, INDCs  have taken the debate away from the environmental realms into the heart of economic, energy and other sectoral policies.

Climate change has now become the territory of Ministers of Finance and CEOs as its financial and economic implications are better understood: this is illustrated at present in the UK where the withdrawal of renewable energy subsidies is leading to job losses for solar businesses. Businesses want national policies, supported by a strong deal in Paris, to provide policy certainty over the longer term; a recent PwC survey of CEOs showed that nearly 80% of CEOs believe that a clearer national policy framework will drive action on climate action, and that they need better knowledge and information to sustain their business and value.

In aggregate terms, the INDCs have only marginally bent the curve to keep us on an emissions pathway that limits warming to 2°C – and we know costs will rise if we delay further. In addition, the INDCs will only become effective within an agreement in 2020 so there is much to be done over the next five years to build resilience and set a low carbon pathway in place. INDCs have locked in some of the early and easier actions on climate change; and it’s clear that it will get harder over time to bridge the gap in emissions once we have tackled these easier transitions.

Bankers from Bangladesh to the UK get the need for change; CEOs, Mayors and politicians get it too.  Let’s hope that in Paris the negotiating Parties will come together to give a clear message to markets, regulators and consumers that low carbon development is the only way forward and that action now will reduce future costs.