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Written by Celia Rodríguez
What is the Conference of the Parties (COP26)?
The COP (Conference of the Parties) is the supreme decision-making body of the UN Framework Convention on Climate Change (UNFCCC), which is the result of the international treaty adopted in 1992 in Rio de Janeiro at the Earth Summit (United Nations Climate Change)
Ever since 1992, the Conference of the Parties has taken place once a year with representations for all the signatory States whose main goal is to review and adapt the implementation of the Convention (“The Conference of the Parties”, n.d.). Therefore, some important decisions have been attained throughout the yearly conferences. For instance, the Kyoto protocol in COP3 in 1997 and the well-known Paris Agreement, adopted at COP21, which has been in the spotlight in all the following negotiations and will still be in this upcoming COP26.
This year’s Conference took place in Glasgow from the 31st of October until the 12th of November. During the summit, parties brought forward different commitments aimed to accelerate the goals set in the Paris Agreements as well as in the UN Framework Convention on Climate Change (“Negotiations”, n.d.). Through this article, we will explore the main objectives for COP26.
Key Goals in COP26
GOAL Nº1: Secure global net-zero by mid-century and keep 1.5 degrees within reach
Climate science proves that, in order to reach that goal, we would have to halve emissions over the next 10 years (“Greening the Supply Chain to beat Climate Change”, November 22, 2021). At that pace, we could get to net-zero emissions by mid-century. Otherwise, temperatures will keep rising, and the world will experience extreme weather catastrophes, such as flooding, fires, or the destruction of ecosystems and species (Eurostat).
In an effort to decelerate temperature rising, the Paris Agreement set the 2°C global warming threshold, meaning that countries agreed to keep global warming below such level (“The Paris Agreement”, n.d.). Nevertheless, science has proved how this goal is no longer sufficient to slow down global warming, as reducing carbon emissions alone will not make a significant change. This is the reason why the new objective is to reach net-zero by mid-century, which means that CO2 emissions stop. Furthermore, emissions of other greenhouse gases need to be reduced as well.
Since the adoption of the Paris Agreement, countries are expected to present their Nationally Determined Contribution (NDC) every five years. This is a record of the current and future measures taken to reduce emissions in different economic sectors. In 2020, over 80 countries signatories of the Paris Agreement updated their NDC, and especially G7 countries led the initiative by setting specific targets towards a net-zero emission economy by 2050. The UN Summary of the Ministerial Thematic Forums for the High-level Dialogue on Energy (21-25 June 2021), develops recommendations for countries to take action towards the achievements of the Sustainable Development Goal 7 (SDG 7), which is necessarily linked with the objectives set by the Paris Agreement (“Decoding Net-Zero Pledges to meet Paris Agreement Goals, SDG 7”).
One of the foreseen solutions is to abandon coal power – a non-renewable energy source used to generate most of the electricity worldwide. In the EU, countries have significantly reduced their hard coal production from 277.4 Mt (Metric ton) produced in 1990, to 56.5 MT in 2020. Despite this reduction, in order to reverse the situation, fossil fuels would have to be entirely substituted by renewable energy sources (solar energy, wind, biomass, etc.) that do not emit carbon dioxide or any greenhouse gases. However, it must also be considered that, as stated by the U.S. Energy Information Administration, renewable sources are not perpetually available and also have a downside to them, since they are not always necessarily sustainable. For example, hydropower dams that produce large amounts of electricity can also ruin river ecosystems, damage wildlife, and force out surrounding communities.
Another main target is to preserve forests, for their crucial role in removing carbon from the air which is, as we have seen, one of the ultimate climate goals. For that matter, fire prevention, as well as transitioning the global agricultural trade into a more sustainable production, are extremely important. Thus, countries could financially prompt sustainable farming and cleaner technologies.
Likewise, the car industry is potentially capable of leading a change. The members of the European Parliament (MEPs Committee) have committed to reducing up to 45% of CO2 emissions from new cars by 2030, specifying that manufacturers whose average CO2 emissions exceed this limit will pay surcharges to the EU budget. Furthermore, Elizabeth Wathuti, the co-chair of the COP26 and founder of the Green Generation Initiative, urges that these commitments to decarbonise in the next decades need to start now by reconsidering where countries and privates alike are investing human and financial capital.
GOAL Nº 2: Adapt to protect communities and natural habitats
The second main goal for the COP26 is to adapt to the new climate challenges and avoid further destruction of habitats, livelihood, and loss of species. Often vulnerable communities lose their lives or their homes due to the impact of climate change. Some of the proposals on the table for this Conference include deploying financial support into building early warning systems such as flood defences or the restoration of habitats and development of sustainable agriculture.
In addition, several campaigns within the UN have been launched for that matter. For instance, the Risk-informed Early Action Partnership (REAP) was launched during the UN Climate Action Summit in September 2019 to enable action in advance to natural disasters so as to protect the people that are not yet adequately covered against these kinds of catastrophes. As estimated by this Summit, one in three people suffers from a lack of early warning systems. For instance, some early action plans that the REAP has proposed to stakeholders is to integrate climate adaptation laws and policies to ensure a diminution of climate change impacts, as well as investing on infrastructure or on early warning systems that could, for example, prevent in advance that a heatwave will be affecting a certain area (“What are the estimated costs of climate change?”, n.d.).
Another campaign with great potential for this matter is the Race to Resilience, which was introduced in the Climate Adaptation Summit in January 2021 (“Climate Champions” (2021, January 25)). Created by Alok Sharma who presides over COP26, the campaign aims to mobilize businesses, investors, and civil society to reverse the situation of millions of vulnerable communities affected by climate risk conditions (droughts, flooding, the rise of sea level, extreme heat, etc.). The investment will be deployed into building resilient livelihoods and infrastructures that could potentially further catastrophes due to climate change.
GOAL Nº 3: Mobilise Finance
The Paris Agreement already addressed the key role of banks, companies, insurers, and investors in accelerating the transition to a net-zero economy. In order to incentivise the financial sector’s ambition towards a zero-emissions economy, States at the COP26 will have to address effective measures that should be implemented by parties on the capital market. Based on science guidelines, the world could reach a net-zero economy by 2050 if the transition is accelerated. The capital market (comprising capital owners, managers, or seekers as well as financial intermediaries) could potentially lead the change in production and consumption of energy (“How investors can drive the transition to net-zero”, n.d.). The decarbonisation of the global economy essentially needs a reallocation of capital into transformative innovations and sustainable technology. However, financial markets also require defence mechanisms against global warming, thus the Financial Stability Board becomes an international body aiming to protect global financial markets from climate change risks, among other systemic risks. They developed the Task Force on Climate-related Financial Disclosures (TCFD) which helps companies stakeholders to quantify their climate-related risks and to put their metrics into action towards an accelerated transition to net-zero. Their role is essential, as capital market participants can lead the transition (“Solutions”, n.d) . For instance, investors should be allocating capital to companies that have actual attainable net-zero goals rather than to those with high emissions records. Furthermore, banks can financially support those entrepreneurs willing to innovate on clean energy technologies or develop the so-called “carbon markets” to help investors manage eventual risks (“Why net-zero matters for investors”, n.d).
There are, for that matter, alliances aiming to create an impact on the financial sector. One example would be the Glasgow Financial Alliance for Net Zero (GFANZ) which reunites more than 70 trillion dollars from assets committed to a net-zero economy by 2050 (“About us”., n.d.). Moreover, there are over 2.000 organizations internationally supporting the Task Force for Climate-Related Financial Disclosures (TCFD). Equally, 17 central banks have committed to adjusting their financial systems to target net-zero and fight climate risks (2021 Status Report (October 2021) Task Force for Climate-Related Financial Disclosures). To sum up, the OECD estimated a mobilization of 78.9bn dollars of climate finance in 2018 (COP26 Explained (2021) UN Climate Change Conference UK 2021. p.11). Therefore, progress has been made, but the COP26 will address financial mobilization as one of the crucial challenges to achieve that net-zero goal by 2050 (“The Conference”, 2021).
GOAL Nº 4: Work together to deliver
“Inaction is not an option”, as Michelle Scrimgeour (Scrimgeour, 2021), COP26 business leaders group, assures. Appealing to the urge to actually take action and develop strong action plans to implement the Paris Agreement. States and non-state actors must get to net-zero emissions before 2050, and the world is short on time. It is urgent to focus on unequivocal commitments, aligning influences in order to build the essential sustainable economy that would eventually slow down the increase of global temperature, and by extension, that would protect both the environment and civil society. This is what Michelle Scrimgeour (Scrimgeour, 2021) calls “inclusive capitalism in action.” Working together to deliver will be a major challenge in the COP26.
There is clear evidence of practical collaboration that is taking place between States, regarding the transition from coal to clean power. In COP26, the Energy Transition Council worked specifically for this matter. This council is formed by political, financial and technical leaders of the global powers (“Focus of Energy Transition Council”, 2021). Their objective is to make clean energy sources the most profitable and effective alternative for all countries, which leaves the dispute open on whether it is or not profitable to leave behind coal energy, taking into account the current energy production crisis that the world is facing, especially since clean energy sources, unlike coal energy, are not a constant power source. Nevertheless, collaboration between states has been noticeable as the Powering Past Coal Alliance has grown (“New PPCA members tip the scales towards consigning coal to history at COP26”, November 3, 2021) This is a coalition of States, local entities, banks and utilities determined to put an end to international financing of coal plants.
Conclusion
To sum up, human action has degraded natural ecosystems, and the exorbitant amounts of greenhouse gases emissions during the last decades have caused an increase in global temperatures that is now extremely concerning. States, financial markets, and individuals are all aware of the devastating consequences of this phenomenon. As the global temperature continues to increase, the climate is changing so that the world is already experiencing its catastrophic results, such as extreme floods or fires that are destroying essential ecosystems such as forests. The world has realized that there are strategic changes that need to be made. However, States and great investors are the ones that will need to lead the change. Through COP26, efforts have been deployed by State representatives in order to agree on actual plans and policies that could potentially attain the required goals discussed. Nevertheless, the uncertainty of whether these agreements will come into effective action or not is yet to be seen.
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