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November 10, 2021
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Summary of COP26 Week One

By Adrian Bishop | Time to Read: 10:00:00
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Summary of COP26 Week One
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Good COP Bad COP?

The main points from Week One of COP26

Confused over the plethora of announcements coming out of the crucial COP26 Conference in Glasgow? Want to know if the UN climate change conference is going well or badly? What did its first-ever Finance Day bring? iResearch Services is here to help with a summary of the first week. Look out for our concluding round-up at the end of the event, too, to keep track of developments.

How has it gone so far?

Good COP or bad COP so far? Somewhere in the middle, say commentators. The influential International Energy Agency says that promises made at COP so far are likely to bring about a 1.8C degree rise in global temperatures – less than the 2-degree ceiling, but not hitting the 1.5C-degree goal. Bear in mind, too, that target will only be achieved if everyone lives up to their promises.

As host of COP, the UK has announced it is to be the ‘world’s first net zero-aligned financial centre,’ but even its proposals have met with criticism for not going far enough and failing to prevent ‘greenwashing.’ But there has been progress made on nailing down specific dates and promises to move away from reliance on coal and tackling deforestation.

The focus on finance suggests that the money is there to fund measures to cut greenhouse gases. Now we just need programmes that deliver on their pledges.

GOVERNANCE AND POLICY

Disappointing G20 heaps pressure on COP26

There was an air of disappointment before COP26 began on 31 October, with news that the G20 nations produced few concrete promises on limiting greenhouse gas production. The G20 meeting in Rome ahead of COP26 even removed references to 2050 as a date to achieve net-zero carbon emissions, which was in earlier versions of the agreed statement. The final version says, "We recognise that the impacts of climate change at 1.5°C are much lower than at 2°C. Keeping 1.5°C within reach will require meaningful and effective actions and commitment by all countries." But the lack of practical progress puts more pressure on COP26 to find some major breakthroughs.

FINANCIAL SERVICES

‘Money is there’ for net zero

Former Bank of England Governor Mark Carney, who is now UN Special Envoy for Climate Action and Finance and COP26 Private Finance Advisor to British PM Johnson, told a COP summit on the first-ever conference Finance Day that “the money is here” to reach Net Zero, thanks to private capital, “but that money needs net zero-aligned projects.” Mr Carney says, "We have banks, asset managers, pension funds, insurance companies from around the world — more than 45 countries — and their total resources, totalling $130 trillion US.” That is $30 trillion over the target needed to reach net-zero. More than 450 firms, including many leading banks and finance companies, support the goals of the Glasgow Financial Alliance for Net-Zero. However, some non-profits question the commitments, as many banks continue to finance fossil fuels.

* Swedish campaigner, Greta Thunberg, interrupted a discussion on carbon offsets to accuse panellists of greenwashing and endorsing projects that harm local communities. She and other activists hit out at a task force led by Mr Carney and Standard Chartered Plc head Bill Winters to scale up the voluntary offsets market. At the end of the week, she also accused COP26 of being a “failure”, a “public relations event” and a “global greenwash festival.” “We cannot solve a crisis with the same methods that got us into this in the first place," she told the young people’s Fridays for Future rally. "What will it take for the people in power to wake up?” Commitments that are full of loopholes are not wanted, but that is all that COP26 is delivering. “We are tired of their blah, blah, blah. Our leaders are not leading."

UK to be ‘world’s first net zero-aligned financial centre’

The UK is to lead the ‘green revolution’ to be “the world’s first net zero-aligned financial centre,” Chancellor Rishi Sunak has told COP26. “This means we are going to move towards making it mandatory for firms to publish a clear, deliverable plan setting out how they will decarbonise and transition to net-zero with an independent task force.” He called on other countries to follow. Mr Sunak welcomed “historic” climate commitments from private companies covering $130 trillion of financial assets. “These commitments will help to create a huge pool of cash that could fund our net-zero transition, including the move away from coal, the shift to electric cars, and the planting of more trees.”

To guard against greenwashing, a science-based ‘gold standard’ will be drawn up by a new Transition Plan Taskforce, composed of industry and academic leaders, regulators, and civil society groups. However, green groups are concerned that the commitments are not mandatory. By 2023 many large UK business and financial institutions will have to show how they will hit climate change targets. Next year the UK will publish a “transition pathway” for the financial sector aimed at achieving the 2050 goal.

The “comprehensive plan” will give the sector the “information they need to take climate into account in every financial decision.” In total, the UK will spend £576 million on a package of initiatives to mobilise finance into emerging markets and developing economies, including £66 million to expand the UK’s MOBILIST programme, which helps to develop new investment products which can be listed on public markets and attract different types of investors. The Chancellor also announced an innovative new financing mechanism - the Climate Investment Funds’ Capital Markets Mechanism (CCMM) - that will boost investment into clean energy, including solar and wind power, in developing countries.

ENERGY

Nations and banks sign Coal to Clean Power statement

Not only have leading nations agreed to move from coal to clean power, so have 25 of the world’s leading banks. More than 40 nations have agreed to stop investing in coal generation schemes from 2022 and ending coal power from 2030 for richer nations and 2040 for the less wealthy. By signing the Global Coal to Clean Power Transition statement an extra US$17.8 billion a year of public support can be moved out of fossil fuels and into clean energy production. Since the Paris Agreement, there has been a 76% drop in the number of new coal plants planned globally. However, some top coal-using nations including the United States, China and Japan, have not signed up and Australia says it is too soon to meet the pledge to end coal financing. The signatories recognised that “coal power generation is the single biggest cause of global temperature increases” and “recognise the imperative to urgently scale-up the deployment of clean power to accelerate the energy transition.”

Global pledge to cut methane

The Global Methane Pledge, originally launched in September has won fresh backing at COP26. Methane is one of the easiest greenhouse gases to cut and more than 100 UN states have now promised to cut production by 30% by 2030. As European Commission President Ursula von der Lyon explains, “Methane is causing 80 times more global warming than CO2. Today, global methane emissions grow faster than at any time in the past. So, cutting back on methane emissions is one of the most effective things we can do to reduce near-term global warming and keep 1.5 degrees Celsius. It is the lowest-hanging fruit.” As with the coal to clean energy pledge, this has added a firm target and timescale to the sentiments shown by the G20.

‘Stop fossil fuels, before they stop us’

UN Secretary-General Antonio Guterres gave a stark message at COP26  concerning fossil fuels - “Either we stop it — or it stops us.” The addiction to fossil fuels pushing humanity to the brink, he says. “It’s time to say: enough. Enough of brutalizing biodiversity. Enough of killing ourselves with carbon. Enough of treating nature like a toilet” he told the delegates at the UN Climate Conference in Glasgow in his opening statement. If at the end of the meeting, commitments fall short, countries must revisit their national climate plans and policies. “Not every five years. Every year. Until keeping to 1.5 degrees is assured. Until subsidies to fossil fuels end. Until there is a price on carbon. And until coal is phased out.” Some might have the impression that we are on track to turn things around. “This is an illusion. The last published report on Nationally Determined Contributions showed that they would still condemn the world to a calamitous 2.7-degree increase.” However, the Secretary-General says there is “progress to build upon.”  “A number of countries have made credible commitments to net-zero emissions by mid-century…The climate action army — led by young people — is unstoppable. They are larger. They are louder. And, I assure you, they are not going away. I stand with them.” To tackle worries over a “deficit of credibility and a surplus of confusion over emissions reductions and net-zero targets, with different meanings and different metrics” he announced the setting up of a Group of Experts to propose clear standards to measure and analyze net-zero commitments from non-state actors. “

Global Energy Alliance for People and Planet launched

A new alliance has formed with central investment banks, which aims to mobilise $100 billion for renewable energy, low carbon technology and eco-friendly jobs. The Global Energy Alliance for People and Planet (GEAPP) issued a Call for Transformational Country Partnerships. It aims to offer financial and technical assistance to countries to advance major national programs in fossil fuel transitioning, grid-based renewables and distributed renewable energy. National governments have been invited to respond in partnership with key sub-entities that might function as essential partners in their programs (e.g., state-owned enterprises/utilities or sub-sovereign entities. GEAPP is backed by The Bezos Earth Fund, Rockefeller Foundation and more.

Green Grids Initiative

Five countries are collaborating over a Green Grids Initiative (GGI). Under the One Sun One World One Grid campaign, efforts will be stepped up to construct a renewable energy infrastructure. Australia, France, India, the US and UK are founder members. The aim is also to facilitate international clean energy trading. “The sun never sets – every hour, half the planet is bathed in sunshine. By trading energy from sun, wind and water across borders, we can deliver more than enough clean energy to meet the needs of everyone on earth. the intermittency of solar generation by connecting nations in different time zones.” But to meet the sheer scale of the challenge, a more interconnected global grid needs to be created. “We need new transmission lines crossing frontiers and connecting different time zones, creating a global ecosystem of interconnected renewables that are shared for mutual benefit and global sustainability. This must be combined with expanded and modernised national and regional grids and complemented with the rapid scale-up of mini-grids and off-grid solar solutions,” says GGI.

REGULATORY

New financial reporting standards body

The formation of a new standards body for climate disclosure has been announced at the COP26 climate conference. The International Sustainability Standards Board (ISSB) was launched by the International Financial Reporting Standards Foundation (IFRS). At the same time, the Climate Disclosure Standards Board and the Value Reporting Foundation are being consolidated into IFRS by June 2022. The ISSB will focus on information that is material to the decisions of investors, lenders and other creditors, beginning with climate-related issues, and extending to other ESG matters. It aims to develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs. The ISSB says the developments “fulfil the growing and urgent demand for streamlining and formalising corporate sustainability disclosures.”

COP26 STORIES YOU MAY HAVE MISSED

Deforestation to get the axe

Around 110 countries have agreed to end deforestation by 2030. The countries committed to working collectively to halt and reverse forest loss and land degradation by 2030 while delivering sustainable development and promoting an inclusive rural transformation. Signatories include nations covering around 85% of the world's forests, including Brazil, Canada, Russia, Indonesia and the Democratic Republic of the Congo. But just days after the signing of the declaration at COP26, Indonesia has changed its mind, saying the agreement was “inappropriate and unfair” as the country could not promise what it could not do. The concern is now on follow-through, as a previous agreement in 2014 failed to slow deforestation

WHAT’S NEXT?

The focus at COP26 turns to how to cope with climate change, how women are disproportionately impacted by climate change, zero-emission vehicles and cities and buildings. The conference is due to end on Thursday 12 November, but previous events have overrun.

Don’t miss our end of COP Summary explaining the highlights of the final week. And look out for iResearch Services’ latest paper on How Sustainable is Financial Services? and the forthcoming Sustainability in Technology report, coming soon!

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