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The breakthrough

The Paris Agreement was ratified in 2016, making it a pivotal year for the world's climate

The Paris Agreement happened in December 2015 in a blur of diplomatic activity - and you might think climate slipped down the agenda in the months after. Not so. To ensure the treaty enters legal force and starts as scheduled in 2021, the pact needed to be signed and then ratified by member states. Getting that done took up much of 2016.

First came the signatures. At a UN event in April, leaders from 175 nations put their names to the deal. Their number has since risen to 197. Ratification was the next priority. The Paris Agreement was to take legal effect 30 days after at least 55 nations representing 55% of global emissions had ratified it, though provisions only become binding from 2020, when the Kyoto Protocol's second period ends.

The threshold was reached on 5 October - by when 86 nations (or Parties, in UN jargon) had ratified. That means the treaty came into force on 4 November, in time for the next UN climate powwow in Marrakech. All this was momentous - marking 2016 out as the year the world really knuckled down on its climate problem.

Emissions themselves haven't been falling, but, thanks to renewable energy, economic expansion hasn't increased pollution either. Global CO2 emissions were steady for a third year running, at 32.1bn tonnes in 2015, despite annual growth in electricity generation and the global economy of 3.1%, according to the International Energy Agency (IEA). Critically, more than 90% of new power generation in 2015 came from zero-carbon sources.

Emissions from China declined as coal's share of power output fell below 70%, a drop of more than 10% since 2011, while renewable energy's share of total electricity jumped from 19% to 28% over the same period. The US saw a 2% decline in emissions as coal generation shrank, thanks to natural gas's rise, the IEA said. The declines were offset by increases in Asia and in Europe.

19 to 28% - rise of renewables' share of China's electricity market, 2011-2015

Several countries in 2016 made strides to meet their Paris Agreement pledges, especially in the roll-out of emissions trading. Mexico, the US and Canada signed an agreement in September pledging to work together to establish such trading systems. Mexico had been toying with this for a while, and several Canadian provinces and US states already participate in carbon markets.

China continued to develop plans for its nationwide carbon market, which will surpass the EU's as the world's largest when it starts next year. Taiwan was also preparing for the start of trading under its new system, while New Zealand kept working on a revamp of its emissions market.

Progress wasn't uniform. In America, President Barack Obama's Clean Power Plan proposal, which would offer states a choice between regulating emissions or setting up market systems to reduce them, spent much of the year trying to see off legal challenges. In September, the US Court of Appeals started to hear the arguments.

In America's northeast, the Regional Greenhouse Gas Initiative - a nine-state emissions-trading system - struggled to reach agreement on new, tougher targets for cuts. On the other side of the country, California's carbon market faced a legal challenge that could, if successful, make emissions permits worthless. The state's governor in September went ahead anyway and signed off on legislation that would extend the market system beyond 2020.

In Europe, member states grappled with a review of the bloc's emissions market for the period from 2021 to 2030. Persistent oversupply of allowances - the bane of the EU's system - sent prices tumbling at the start of the year. Europeans debated how the next phase could end such generosity without hurting industry.

Ironically, cleaner energy was part of the problem. As renewables started to eat away at coal-fired generation's market share, demand for emissions allowances fell. Cheap gas, also biting into coal, had the same effect.

Only by 2019 could measures be in place to fix the anomaly by reducing the number of permits in circulation.

But those were details to be fixed. In 2016, the direction of travel was set, and things started moving. World powers at last got serious about the climate.

This article is part of Outlook 2017, our annual book looking at energy market trends for the year ahead. To purchase a copy, click here

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