First appeared in BusinessGreen

Will the United Nations Climate Change Conference (COP 21) in Paris later this year be a resounding success? Can we dare to hope that it will meet our expectations?

Entertaining any such aspiration is hard for those of us who attended Copenhagen at the end of 2009 with such (in hindsight) unrealistically high hopes. Certainly many of us who were there, myself included – an experienced lawyer and trained public international lawyer to boot – still carry the psychological scars.

At the G7 Summit in Germany last week, leaders of the world’s major industrial economies resolved to wean their economies off fossil fuels by the end of the century. The pledge marked a major step in the fight against climate change and raised the specter of a UN climate deal in Paris.

But what does this drive mean for a global treaty? What should we consider as a success and what should we consider to be a failure? What are the criteria we should judge this against?

As all international lawyers know, public international law generally does not push nations beyond what they are already doing. Except for times of great change such as the end of WWII, it codifies existing state practice but generally does not overly stretch sovereign states to break new ground. Put simply the truth is that nations do not like to commit themselves to “legally binding” international obligations unless they know they can be certain in advance of complying.

In this context we were expecting far too much of international law from Copenhagen. We wanted a possible global treaty on climate change to achieve something it is not designed or equipped to do. So if this is the case, what is a global agreement good for especially if it is not going to be, in the classical international law sense, a legally binding one?

To answer that question and decide if our hope for success in Paris is justified we first have to decide what constitutes success. We have to set out what the benchmark for “real world” success in Paris is at the end of 2015.

What do I mean by “real world” success? I mean an agreement that is relevant to both the World’s of business & finance. Particularly the financial markets who both fund the status quo & will need to fund the envisaged transition. It would need to be a high level political & flexible framework:

1. that does not need to be legally binding but it does need to be detailed & robust enough to evolve into a legally binding instrument when the time is right;

2. which both frames and critically links the bottom up Intended Nationally Determined Commitments (INDCs) in the international context;

3. which recognise that all countries of the world need to take action with respect to current and future emissions yet be sensitive to historical contributions;

4. that recognizes it is not all about governments and policy, it is equally about clean technology reaching critical mass, efficiencies and private sector finance;

5. (The politically difficult bit) that addresses climate finance in a way which is satisfactory to both the so called developed and developing countries;

6. that is capable of responding to increased urgency and political will to ratchet up the level of individual and aggregate ambition embodied in the INDCs;

7. addresses integration across other critical regimes. For example, trade/WTO, financial stability, financial regulation, aviation and shipping.

Here I want to focus particularly on why it does not matter if Paris is unlikely to produce a legally binding treaty. In a world where such a treaty would require ratification by the US Congress such expectations are currently unrealistic. But more than that such a rigid legally binding agreement could well be counter-productive right now. It is not unrealistic to contemplate that events and technological developments could change the climate change dynamic quickly. When that happens we do not want to be locked into a legally binding arrangement which lacks the necessary ambition.

Rather what we should be looking for is a political agreement on steroids; a supercharged political framework that can accommodate the bottom-up commitments from sovereign states – the so-called INDCs. This bottom up architecture is an important move away from the top-down architecture previously set out in the Kyoto Protocol and a recognition of geo-politics within which international law must function.

We have to acknowledge now that with currently levels of political ambition (improved as they are on recent years) it is highly likely that sum of all the INDCs will not deliver the 2C ambition we need to deliver us to net zero emissions by 2050. If we are lucky it may add up to something between 3-3.5C. If this is the case, it will be the subject of much justified criticism because we will be storing up trouble and a need for more stringent and expensive action later.

However, whilst such criticism for lack of ambition will be justified we will have a choice. We can choose to label such an agreement as another failure. Or, we can welcome this as a major step forward on the road towards achieving a global 2C framework. This is because a global agreement, even with ambition set at 3-3.5C, will take us a significant distance in the direction of a 2C target. This is because it will essentially remove many of the obstacles to such ambition.

Such an agreement in Paris will mark a critical turning point. A point where most countries in the world have accepted the need to take action regardless of whether or not some other group or block of countries acts first. They will do this in the context of a global political agreement to act. While, bottom up, such commitments within an internationally agreed framework will provide the common norms that will allow these national actions to link up. Through a linked market mechanism for example. Through this country-by-country process the policy and regulatory infrastructure for action and 2C ambition is being built.

It is this global infrastructure that makes such a “political” agreement real. More real than some aspirational “legally binding international agreement”. Remember The Kyoto Protocol was binding but it did not stop Canada withdrawing. With such a global infrastructure in place it will then be a much easier process to ratchet up ambition to 2ºC and for such a “political agreement” to evolve into a legal treaty. Remember I outlined above public international law is more often about codifying existing practices of sovereign states than creating new ones.

Think of it in terms of a simple analogy: imagine the world is a home (which of course it is to humanity) of 200 rooms. It is necessary to cool our home to a safe level.Yet our home does not have any kind of cooling system. Kyoto set out to provide some infrastructure but only for about 30 of the 200 rooms. This does not work because even if we cool those rooms heat from the remaining 170 rooms will just heat these rooms up again The Paris agreement is about rolling out the cooling system for all 200 rooms. Such that we we can cool our whole home. Once this cooling system is installed we can turn up the ambition through the global thermostat.

Arguing about the thermostat setting before we have built the cooling system is academic at best, especially if it means we do not get to build the infrastructure needed to deliver the ultimate goal because we are distracted arguing about the temperature setting for the as yet built cooling system.

It is this real world architecture and clear direction of travel that will get the attention of the financial markets and tell them climate change and climate action is in turn real. This will avoid both a potential market mis-read and a disorderly transition in the future. That will be quantified as a risk for business as usual investment in, for example, fossil fuels and increase the cost of capital for investment that does not clearly fit with this direction of travel. The markets will then take a view on when – not if – the thermostat is dialed down from a 3 to 3.5C setting to a 2C setting.

The financial markets will need this to be translated into their language in a way that tells them it is relevant now. In much the same way as Carbon Tracker translated the carbon budget for the financial markets. The energy companies will need a road map or blueprint for the orderly transition to a climate secure global energy system. These two objectives will be the key goals for Carbon Tracker on the road to and beyond Paris.

Anthony Hobley is chief executive of the Carbon Tracker Initiative