There is just one day left at COP26, which means negotiation and steely nerves. It is not unusual for summits to end with last-minute compromises and agreements that are often made in ‘overtime’—spilling into the weekend after their official end. The Glasgow edition is under pressure to meet the timeline, in part due to increased complexity of travel arrangements in the current COVID environment.
The talk on the fringe is around three areas:
China
A joint agreement with the US and a hard stand on coal have given a mixed message for those looking for signals from the superpower.
Finance
Financial help for developing nations is critical to meet the 2030 targets, as is private finance in innovation, mitigation, and adaptation.
Annual Acceleration
There is a growing sense that the only way to reach ambitious targets is by preparing an annual progress report, as well as a ratcheting up of thresholds.
China surprised the summit with its joint announcement with the US, regarding boosting efforts to cut emissions and focusing on methane and deforestation.
The focus on methane announced by the two powers is significant as cutting that particular GHG would imply that the temperature pathway from now until 2100 will be a great deal smoother if it is tackled alongside CO2. Methane is far more potent as an atmospheric heating accelerant than CO2, but receives less attention as it remains in the atmosphere for decades rather than centuries. The different heating profile of these two gases, coupled with an 80-year target implies that it is possible to meet the ultimate goal of 1.5 – 2 degrees, but, with warming periods in between that are higher than 2 degrees. The impact of this on oceans, weather patterns, and ice melt could become permanent, even after the curve is flattened to meet its target range.
China’s refusal to phase out coal puts a severe dent in one of the major ambitions of the summit. This will clearly make it difficult to formalize the final text of the COP declaration with a seal of success.
Finance continues to be the focus of less developed nations. These countries will not be able to build the required sustainable infrastructure without large-scale support to adapt to the unavoidable short-term impacts of climate change. One consistent theme throughout these two weeks has been the failure of large economies to provide the $100 billion per year that was promised in 2009. This ‘missed’ target needs to be increased substantially throughout the 2020s.
Agreement on this increased target, and mechanisms to ensure that it is met, are in the draft text but must make it to the final document.
Annual acceleration of ambition, including raising targets for overall emission cuts and robust reporting of progress is vital for success over the next 10 years. Antonio Guterres, UN Secretary-General, appealed to the summit to avoid the ‘lowest common denominator’ in the final agreement. He noted that while funding of fossil fuels continues at its current rate, all pledges and commitments ‘ring hollow’. Memorably, he stated, “Every country, every city, every company, every financial institution, must radically, credibly and verifiably reduce their emissions and decarbonize their portfolios starting now.”
From the sidelines, it does seem that there is a real desire to create the strong momentum needed to signal intent and open the floodgates of much-needed private finance. The short-term game, though, still seems like one of brinkmanship between negotiating nations over their respective commitments.
For banks as they build strategies to become catalysts of change, the difference between short- and long-term action is the difference between orderly and disorderly scenarios, with a massive difference in potential risk and cost.
One day to go, and no one watching the COP reach its denouement doubts the ambition, but the lack of details is certainly a big concern.
Signing off for today, best regards from Glasgow…
