TIM BAINES<br />NORTON ROSE LLP<br /><br />PRESIDENT Obama may have decided that there is little prospect of a binding agreement coming out of next month&rsquo;s Copenhagen conference. He spoke yesterday about an &ldquo;accord&rdquo; that has &ldquo;immediate operational effect&rdquo;. Against this, many leading businesses have called for an ambitious and robust global deal. So what should business wish for from such an accord? <br /><br />The key to the negotiations may be finding a binding agreement on emissions levels within an agreed timeline, possibly in Mexico City in late 2010. Emissions targets currently on the table at Copenhagen are significantly below the required levels, even for a 50 per cent chance of stabilising global temperatures at 2C above pre-industrial levels. This will have to be addressed for an agreement to be meaningful. It is also to be hoped that major emerging economies &ndash; which are not expected to take on binding emissions caps at this stage &ndash; will agree to reduce greenhouse gas production. <br /><br />At the heart of any agreement will be emissions trading markets, an area where London is a major player. Market mechanisms have been used as a way of turning the right to emit greenhouse gases into a valuable, tradable commodity. This allowed emissions reductions to be achieved at the point of least cost and then sold to parties that need them to comply with the international climate change regime, or local emissions trading schemes like the EU&rsquo;s Emissions Trading Scheme (which restricts the emissions of a number of key industrial sectors in the EU). This should continue. A scaled-up international carbon market, which creates financial support for developing countries and promotes cost-effective emission cuts, presents opportunities for business both in industrialised and developing countries. Up to 85 per cent of the funds required for adapting to and mitigating climate change are expected to come from the private sector. Carbon markets must be an important part of the Copenhagen agreement.<br /><br />Furthermore, public finance must be provided to developing countries to boost finance from the carbon markets and domestic investment. This remains contentious. <br /><br />Deforestation must also be addressed. Up to 20 per cent of greenhouse gas emissions result from deforestation, and there is recognition that a mechanism involving public and private finance is needed. It is hoped that a market mechanism will develop which will reduce the cost to public finances, while producing real, sustainable and verified reductions. <br /><br />Copenhagen participants must recognise that climate change is already affecting many parts of the world, and this will get worse. Historic and current emissions may mean that further temperature rises of up to 1C are inevitable. As such, it is vital to create a framework to help the countries most affected by climate change to adapt to its effects. Measures supporting the roll-out of low-carbon technologies to developing countries will be necessary.<br />