The US and China yesterday signed up for the first time to a global climate agreement, ending a 14-year stand-off between the world's top two polluters.
At negotiations in Durban that overran by 28 hours, the EU signed on to a second round of the Kyoto Protocol, the binding treaty to cap greenhouse-gas emissions due to expire next year, while the US and developing nations including China and India pledged to create a legal mechanism to succeed Kyoto by 2020.
The breakthroughs have widespread implications on renewable energy, carbon-credit markets and financing for developing nations to pay for clean technology - all components of the battle to limit the rise in the world's temperature to 2°C and avoid the worst effects on food security, island nations and the frequency of natural disasters.
"The big thing is that now all big economies, all parties have to commit in the future in a legal way, and that's what we came here for," said Connie Hedegaard, the EU climate commissioner.
Until yesterday, prospects for any climate agreement appeared slim because of an impasse between the US and China dating from 1997, the year the Kyoto Protocol was created.
China and other developing nations said they were not responsible for the emissions that western countries had pumped into the sky for nearly a century, while the US - joined this year by Japan and Canada - said a climate accord would be meaningless without China and India, the world's first and third biggest greenhouse-gas emitters.
The talks were also shadowed by the threat of a global slowdown and its effects on the ability of richer countries to channel climate funding to poorer ones - the traditional Kyoto model. India had earlier opposed joining an agreement, fearing it would stifle economic growth. "How do I give a blank cheque and give a legally binding agreement to sign away the rights of 1.2 billion people?" Jayanthi Natarajan, the Indian environment minister, told delegates. Negotiators came to a compromise by softening the agreement's language to read that nations would craft an "agreed outcome with legal force".
The willingness of China and India increases pressure on oil-producing countries to cut down on carbon emissions. Qatar, the host of next year's UN climate talks, is the world's leading carbon-dioxide emitter per capita.
Saudi Arabia has argued that a global climate regime should compensate oil producers for lost income, citing Opec studies that forecast a drop in GDP of as much as 40 per cent under the stringent emissions targets.
"If China's agreeing to join any sort of regulatory market, it puts pressure on other wealthier countries to do something," said a Gulf climate official who asked not to be identified. "In the longer term you will probably see a softening of the Saudi position, because they're already starting to do things within their borders that could qualify as climate-change mitigation."
The nearly 200 nations at the talks also finalised some aspects of the Green Climate Fund, which is to channel US$100 billion (Dh367bn) a year to developing countries to pay for investments, but did not resolve who would pay into it. Investors need clarity on that and the shape of the post-Kyoto agreement, which nations are to finalise by 2015, said industry executives.
"It will be difficult [for] investors to speculate on what the agreement will look like," said Philip Moss, a managing partner at Mana Ventures, an adviser on clean technology and carbon based in Abu Dhabi.
"People will wait until the text is finally agreed before they're going to start putting their money where their mouth is."