The COP26 UN Climate Change Conference in Glasgow captured the attention of the world. Attended by leaders and luminaries from across the globe, the summit aimed to drive the net zero agenda and build on promises made at Paris in 2015.
The conference began with India's Prime Minister Narendra Modi announcing an unprecedented pledge, surprising many leaders on the world stage. Confirming that the country is set to achieve net zero by 2070, he announced that by 2030 India will increase its non-fossil energy capacity to 500GW, fulfil 50% of its energy requirements from renewable sources, reduce its total projected carbon emissions by 1 billion tonnes and reduce its economy’s carbon intensity by 45%. While it is disappointing that India isn’t aiming for net zero until 2070, we shouldn’t lose sight of what the country has pledged to do. India also continues to press for developed nations to assist developing countries with funding the green transition.
Tuesday heralded the launch of The Glasgow Breakthrough Agenda. The plan to coordinate the introduction of clean technologies and drive down their cost was agreed by world leaders including those from the UK, US, India and China.
Also, more than 100 countries, led by the EU and US, pledged to reduce their overall methane emissions by 30% in 2030 compared to the 2020 baseline, with emphasis around tackling methane leaking from oil and gas production assets – a crucial pledge, as methane is estimated to have contributed nearly a third of total greenhouse gas emissions. That said, significant omissions from the pledge's signatory list include China, India and Russia.
Chancellor of the Exchequer Rishi Sunak unveiled the UK’s plan to become the first 'net-zero aligned financial centre' in the middle of Week One – with the Government to strengthen requirements for all British financial institutions and companies listed on the UK stock market to publish plans detailing the decarbonisation of their operations, lending and investment. He also announced that Britain would support a green bonds capital-markets mechanism and put £100 million towards improving climate financing access for developing countries. The UK’s ambition to be a net zero world leader fits neatly with the acceleration towards ESG reporting and green finance.
Former Bank of England Governor Mark Carney also outlined his £95 trillion Glasgow Financial Alliance for Net Zero (GFANZ) initiative, committed to lowering emissions associated with investment portfolios and loan books to net zero by 2050. GFANZ is a good example of a successful collaborative approach, showing that countries and businesses working together can be a more powerful engine for change than unilateral action.
Thursday saw over 40 countries – including major fossil fuel users Poland and Vietnam – promise to end all investment into new coal power generation and scale up the deployment of clean power generation. However, coal users such as China, India, Australia and the US were not party to the agreement, so while the end of coal may be closer there is still a way to go. This was echoed by COP26 president Alok Sharma, who said more work is needed to bring an end to coal reliance.
Following on from earlier pledges, US special presidential envoy John Kerry and the American delegation rounded off Week One by confirming they remained in “meaningful talks” with China and Russia to enlist their help in the global sustainability drive.
Week Two saw a much-anticipated speech from former US President Barack Obama. He outlined the scale of the challenge ahead, saying the world was “nowhere near where it needs to be” and scolding countries who had failed to deliver on pledges made in Paris, but praised young people for their passion and activism.
On Tuesday, climate analysis coalition The Climate Action Tracker (CAT) announced that based on short-term goals set out at the summit, temperature rises will top 2.4C by the end of this century.
On Wednesday, in keeping with the day’s theme of transport, 24 countries and several car manufacturers joined a pledge to end the era of fossil-fuel powered vehicles by 2040. However, the group largely consisted of countries who had already committed to this such as the UK and Ireland, with major car manufacturing countries like the US and Germany absent from the pledge.
Thursday saw the launch of The Beyond Oil and Gas Alliance under co-chairs Denmark and Costa Rica, targeting an end to new oil and gas projects. France, Ireland, Wales, Sweden, Greenland, Quebec, California and New Zealand were among the founding members. However global oil producers such as the US, Saudi Arabia, Russia and Canada, and European producers in the UK and Norway, were absent. Poland also confirmed it plans to continue to use coal for more than 25 years, despite being one of the headline signatories of a pledge to phase out coal in Week One. Poland’s climate and environment ministry stated: “No responsible government would shun its energy sources overnight, as this would lead to a situation where we could not ensure energy security and there would be no stable power supply.”
The scheduled final day of COP26 began with the publication of the second negotiation outcome draft by COP26 President Alok Sharma. This attracted criticism from numerous countries for its softened language and added amendments.
The Amazon assessment report was also released. The report’s authors recommended an immediate ban on deforestation in parts of the region already at a tipping point, with a goal of achieving zero deforestation and degradation by 2030 across the entire Amazon region.
Despite a planned ending of 6pm on Friday, negotiations went on into the weekend. Amongst other measures, the key headlines from the Glasgow Climate Pact on Saturday were:
- Coal and fossil fuels – there is consensus about "phasing down" (no longer "phasing out") coal and ending "inefficient" fossil fuel subsidies although some question whether the word "inefficient" creates an unnecessary loophole
- Adaptation – richer nations are asked to increase their support for climate adaptation measures by at least double
- Loss and damage – there will be standalone fund for paying for loss and damage caused by climate change but a UN body will be set up to provide technical assistance
- Climate finance – developed countries will look to raise at least USD100 billion per year to assist developing countries
- Carbon pricing – rules are put in place to give substance to Article 6 of the Paris Agreement, with a view to creating an overall market for carbon emissions
- Climate targets – by the end of 2022, nations are asked to improve their national emissions targets for 2030.
There is widespread disappointment about the “watered down” coal wording in the final COP pact but, overall, COP26 has been important for the signals which it sends to governments and markets around the world. In this light, investors are under no illusion that the future lies in low carbon and zero carbon energy technologies and widespread carbon pricing now looms closer. More attention is being paid to supporting developing countries but there is a way to go in persuading China and India to step up quickly. Generally though, regardless of the precise wording of the Glasgow Climate Pact, we can expect to see an accelerated energy transition and a more closely collaborative approach across the globe to addressing climate change.