COP26 Highlights: "The pulse of 1.5 is weak"

After two weeks of protests, pledges, and airy pontificating, the global climate summit COP26 has come to a close. If you've been reading the news (or following along here on Post Industry), you'll know that coming into COP26, hopes for drastic global action were high. Youth and indigenous advocates in particular were on the ground in Glasgow, keeping the pressure on world leaders to take bold action (check out Clover Hogan's fire speech, below):

If you follow me on Instagram, you'll understand why I've been fairly quiet here on Post Industry while so much was happening in Glasgow. But I've had a close eye on the action, and wanted to give you the details of some of the most important pledges made at COP26:

GFANZ rallies net-zero transition financing

The global transition to lower-emissions technology will cost trillions of dollars - much more than the public sector (i.e. government/development funding) can provide. For years, climate advocates have campaigned for private finance to be redirected towards green and renewable opportunities. Progress has been made here - as of November 2021, over 450 members representing more than $130 trillion USD have aligned to the net-zero commitment of the Global Financial Alliance for Net-Zero (GFANZ). These commitments can deliver the estimated $100 trillion of finance needed for net-zero transition over the next three decades.

• Michael Bloomberg, UN Special Envoy for Climate Ambition and Solutions and Global Ambassador for the UN’s Race to Zero Campaign, announced he will join Mark Carney as a co-Chair for GFANZ

• Mary Schapiro, former SEC Chairman and Head of the Secretariat for the Task Force on Climate-related Financial Disclosures (TCFD), will serve as the GFANZ Vice Chair and will oversee its secretariat

A pathway for global climate disclosures is announced

Disclosure standards help companies quantify and communicate their sustainability efforts, providing a clearer signal to the investor community and helping reallocate capital towards sustainable opportunities. As the global business community understands more about the critical role that sustainability plays in enterprise value, the demand for a set of internationally consistent, clear disclosure standards grows.

The International Financial Reporting Standards Foundation (IFRS) took the first step in that direction and announced the creation of the International Sustainability Standards Board (ISSB), which will create a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs. The ISSB will consolidate the Climate Standards Disclosure Board (CDSB) and the Value Reporting Foundation into one body and is expected to release its first standards by June 20222.

"The end of coal"

Coal currently generates nearly 40% of the world's electricity and generates 20% of the world's CO2 emissions. At COP, coal was in the cross-hairs, with several commitments taking aim at reducing our reliance on it. Altogether, it looks like the end is in sight for coal.

In Week 1, over 46 members signed to the Global Coal to Clean Power Transition Statement. The statement's four points are all aimed at scaling up renewable energy and ending financing for new coal-fired power plants.

Developed countries also stepped up to help fund a pilot transition: The Just Energy Transition Partnership, an $8.5 billion USD partnership between the US, UK, EU, France, and Germany, will help South Africa finance a faster transition away from thermal coal, providing a model for other countries to follow.

A commitment to end deforestation

Deforestation eliminates important carbon sinks and vital habitat, further exacerbating climate change. The leaders of more than 130 countries signed the Glasgow Leaders’ Declaration on Forest and Land Use, in which they committed to end deforestation by 2030:

• The declaration encompasses 90% of the world’s forests

• Twelve governments committed $12 billion, and private companies pledged $7 billion, to protect and restore forests in a variety of ways, including $1.7 billion for Indigenous peoples

• Finance is the commitment’s key: 30+ leading financial institutions, representing over US$ 8.7 trillion AUM, have committed to tackle agricultural commodity-driven deforestation as part of broader efforts to drive the global shift towards sustainable production and nature-based solutions.

Methane emissions finally get some focus

Methane is a greenhouse gas that is 10 times more potent than carbon dioxide. Two of the main sources of methane are agriculture and oil & gas production, and advocates have been calling for regulation in these sectors to help limit unchecked emissions.

At COP, more than 100 countries, led by the US and the EU, announced a global partnership to cut methane emissions by 30% (compared with 2020 levels) by 2030. The Global Methane Pledge covers countries which collectively emit nearly half of all methane globally and make up 70% of global GDP.

India’s net-zero commitment

Early in Week 1 of COP, Prime Minister Narendra Modi announced that India plans to achieve net-zero by 2070. India’s commitment includes measurable near-term targets set for 2030, including:

• Half of the nation’s power-generating capacity will be based on renewable energy

• Reduce total projected carbon emissions by 1 million tons

• Reduce emissions intensity of the GDP by 45%

India has been resistant to the phase out of coal and fossil fuels, among other emissions reduction efforts. But this commitment is a promising sign that the country will begin to pursue a greener future in time to meet their 2030 and 2070 targets.

Closing the gap on Nationally Determined Contributions (NDCs)

All eyes were on the NDCs in the lead-up to COP26 - specifically the interim 2030 targets that would put the world on a path to limiting warming to 1.5° by 2050. As of 2 November 2021, the NDC Synthesis Report recorded 166 commitments from all 193 Parties to the Paris Agreement, detailing what these countries would 'contribute' to the global quest for emissions reductions. But unfortunately, they're just not enough.

The IPCC estimated that limiting global average temperature increases to 1.5°C requires a reduction of CO2 emissions of 45% by 2030, or a 25% reduction by 2030 to limit warming to 2°C. But research from Climate Action Tracker (CAT) in COP Week 2 found that all the national pledges submitted thus far to cut greenhouse gases by 2030 would allow the Earth's temperature to rise 2.4°C from pre-industrial levels by 2100.

Credit: Energy Transitions Commission; COP26 High-Level Champions Event: Destination 2030, 5 Nov 2021.

Analysis of the NDCs’ contribution to achieving needed emissions reductions by 2030 shows that currently NDCs comprise a small contribution to emissions reductions. But with the addition of pledges made at COP, significant reductions could be achieved:

• Delivery of the Global Methane Pledge could cut methane by 50 million tons by 2030

• The Glasgow Leaders’ Declaration on Forest and Land Use, if supported by adequate climate finance and enforcement, would result in 3.5 gigatons of CO2 emissions reductions

Delivery of these and other initiatives is critical if 2030 and 2050 emissions targets are to be achieved. Watch the Climate Champions' Week 1 summary on interim 2030 targets:

The US-China Emissions Pledge

The US and China surprised the world by announcing an agreement to work together on reducing emissions. It's an interesting (and vague) arrangement. The US and China are the world's two biggest CO2 emitters, and both have been reluctant to take meaningful action on climate change. The Pledge is short on details, but promises that the two countries will cooperate to achieve the Paris Agreement’s 1.5°C goal. This cooperation includes cutting emissions and establishing regular working groups to address the climate crisis over the next decade. US President Joe Biden and his Chinese counterpart Xi Jinping are now expected to hold a virtual meeting as early as next week to further elaborate on the pledge.

Update on the $100 billion Adaptation Fund

As part of 2015 Paris Agreement, developed countries recommitted to providing $100 bn per year to developing countries to support those nations’ clean energy transition and climate adaptation (an arrangement that was first established as part of Kyoto Protocol). But UNEP’s Adaptation Gap report finds that the $100 bn/year of promised funding is still inadequate to meet the challenges of climate adaptation.

Up to and during COP, many developed countries did make additional pledges. As of 9 November, the Adaptation Fund has received US$ 356 million of new pledges.

• Since 2010, the Adaptation Fund has committed nearly US$ 878 million for climate change adaptation and resilience projects and programmes

• Read more about adaptation funding

The bottom line - The Glasgow Climate Pact

COP26 ended on 12 November with a "fragile win", as over 200 countries signing their agreement to the Glasgow Climate Pact. The pact includes softened language on the elimination of fossil fuels, which may not be enough to limit global warming to 1.5°C by 2050. And the summit failed to secure commitments that would cut emissions 45% by 2030.

"I am really pleased that this has been delivered...I would say, however, that this is a fragile win. We have kept 1.5 alive. That was our overarching objective when we set off on this journey two years ago...but I would still say that the pulse of 1.5 is weak." - Alok Sharma, COP President

Leaders are saying that COP26 is important in that it expanded the foundations and commitments for emissions reductions, and that the pact presents a powerful statement. Whether that statement is powerful enough to achieve the change we need remains to be seen.

"We are begging you: please prove us wrong"

The underlying current of emotion at COP was one of mistrust. Too many years of inaction, too many promises made and not delivered, have given civil society and climate activists a justifiedly pessimistic outlook on the ability of businesses and governments to achieve any real change. We do not trust these institutions to avert the climate crisis, even as we must rely on them to do just that. As the summit concluded, the resigned conclusion was summed up by activist Vanessa Nakate: "prove us wrong".

International negotiations are tricky. The country and business leaders involved in these discussions are balancing the short- and long-term prosperity of their respective countries with their own domestic agendas, personal political affiliations, macroeconomic trends, relationships with allies, and more. As COP Executive Secretary Patricia Espinosa noted, "the transition [to lower emissions] is beyond the scope, scale and speed of anything humanity has accomplished in the past."

But with the many commitments made at COP, and the stakes so high, the world now watches and waits desperately for action. Will global leaders deliver?