COP26 dominates Net-Zero Business Daily’s 2021 coverage
As any year draws to a close, the question of what has happened and what we have learned arises, and especially in our ever-changing world, it can be difficult to remember what happened from one news cycle to the next.
So, the news team at Net-Zero Business Daily put together a Top 10 of the developments, announcements, deals, and themes that we will remember from 2021, our publication's debut year.
As predicted in our What to Watch For article at the beginning of the year, 2021 was dominated by the build up to, events and announcements during, and the aftermath of the COP26 climate meetings in Glasgow, Scotland, in November.
Two developments at COP26 made our Top 10, the first was an update to the Article 6 carbon trading rulebook, while the second was an announcement on reducing the use of coal-fired power generation and the plants' emissions.
Carbon trading is widely considered to be crucial to reducing CO2 and GHG emissions—and therefore easing the path to the net-zero emissions goals demanded by the Paris Agreement—because it enables investment in emissions-reduction technologies.
Politicians and analysts were getting a little nervous about whether talks on enforcement mechanisms would see a breakthrough. That compromise on a framework was found meant a major hurdle was overcome, but critics said there were shortcomings when it comes to transparency and double counting that new UN-supported committees will have resolve.
The second item on our countdown for the year, a coal phase down (because it wasn't a phaseout agreement in the final draft) initially won plaudits for being the first COP document to have any mention of reducing fossil fuel use, but in the end left observers even more disappointed than did the Article 6 work.
Some Asian countries signing up won praise for their actions, but one of their neighbors received brickbats for watering down the agreement compared with a prior draft. The finger was pointed at the world's second largest coal consumer, India, where demand for the fossil fuel is expected to have risen 13.4% year on year in 2021, according to the International Energy Agency (IEA).
Indian Prime Minister Narendra Modi front-ran COP26 by announcing an increase in its renewable power generation targets and a 2070 net-zero emissions goal, which is the third item in our Top 10. India justified the later date by citing the Paris Agreement's differentiated responsibilities wording, whereby developed nations, who have created more of the pollution since the Industrial Revolution, take bigger steps to fix global warming.
Modi was previously criticized for failing to follow his counterparts in China, Japan, and South Korea with pledges of net-zero emissions, even publicly rejecting calls to set a carbon neutrality target. However, India's late, late arrival at the party on 1 November couldn't satisfy analysts as scientists believe the world needs to reach net-zero emissions by 2050 to avert a climate disaster. Still, India will have a lot of work to do as energy demand in the country is set to soar.
That is expected to boost India's carbon emissions, although such pollution was already on the rise. Researchers laid most of the blame for a rise in CO2 emissions in 2021 on India and China. The rise in emissions also made the Net-Zero Business Daily Top 10 for 2021.
A year after the COVID-19 pandemic led to a 7% year-on-year decrease in CO2 emissions to 34.1 billion metric tons (mt), the largest on record, air pollution was on the rise again. CO2 emissions are projected to reach 36.4 billion mt in 2021, just 0.8% below the record of 36.7 billion mt in 2019, and nearly a 5% rise from 2020's level, the Global Carbon Project researchers said in November.
Pledge 1: methane
Emissions of methane, a much more potent GHG than CO2, can't be forgotten about and reduction pledges for this GHG made the Top 10 too. In September, the pledge-drive leaders, the US and EU, unveiled a plan to reduce the world's methane emissions by 30% compared with 2020 by 2030.
Reductions of atmospheric methane in the short term could support reaching the goals of the Paris Agreement, the UN said in September, and more nations signed up in October to the pledge before a formal launch in November during COP26.
Alongside that formal launch, US President Joe Biden announced a range of actions aimed at cutting American methane emissions, especially in the oil and natural gas sector. It was one of many initiatives launched since January by Biden in an effort to keep campaign promises to combat climate change and repudiate many of his predecessor Donald Trump's actions and stances.
Biden taking office in January with a promise of a government-wide approach to tackling global warming and the US returning to international climate stage also made our Top 10 for 2021. Biden's first point of order was returning to the table for Paris Agreement talks. And Biden also ramped up the US' GHG reduction targets at the Leaders' Summit on Climate that he convened in April.
At the summit, a number of initiatives were announced, including some to help the Global South—lower-income countries—such as the Lowering Emissions by Accelerating Forest (LEAF) Coalition and Power Africa Initiative. The initiatives focus on both climate mitigation and climate adaptation, which the UN argues needs more help as more countries fight drought, flooding, and rising sea levels.
Pledge 2: Climate financing
The Paris Agreement's $100-billion promise for funding of initiatives to help the Global South was waylaid, but 2021 finally saw some concrete progress on the pot of money that developed nations declared would be coming in 2015 and again and again as the decade progressed.
With less-than-subtle nudges from the leaders of the likes of Brazil, the Democratic Republic of the Congo, and Nigeria early in 2021, financial support for the Global South arrived at COP26 with a taskforce, climate finance for renewable energy and a shift away from coal-fired output, a boost for adaptation in Africa, and support for climate-smart agriculture among other developments.
Seeking backing for climate change projects in developing nations can find a frosty response, but more support for projects in the Global South was something that COP26 delegates from around the globe could agree was required.
Another fact that observers from around the globe can agree upon is that a lot more renewable power generation is going to be built. IHS Markit kicked off 2021 by predicting renewable energy capital expenditure would increase 14% in the five years ending 2025 compared with the previous year-five-period.
Global installations of new renewable capacity will set a record in 2021 of about 290 GW, compared with 2020's prior record of about 280 GW, according to the IEA. Growth will accelerate to average 305 GW per year for 2021 through 2026, it said. By the end of 2026, global renewables capacity will reach 4.8 TW, or 60% greater than at the end of 2020. Renewables will represent about 95% of the new power capacity installed worldwide from now through 2026, the IEA said.
China will lead the way over the next four years, as the IEA projects that its combined solar and wind capacity will hit 1.2 TW by 2026. This is four years earlier than the country's own announced target. By 2026, China will have 43% of the world's installed renewable power, or about 2.15 TW out of 5 TW globally. The US will be a distant second at 12%, or 600 GW.
The growth of Chinese renewable generation capacity will have a substantial impact down the line, as will the last-but-one member of our Top 10, the EU's complex Fit for 55 undertaking, a package of proposals the bloc believes will lower emissions across its member states by 55% by 2030 and put it on track for net-zero emissions.
EU fitness plan
Fit for 55's impact will be widespread, including in hard-to-abate sectors such as shipping, aviation, and agriculture. Some sectors are in for a rough ride, analysts say, including biofuels and bioenergy.
So too are companies seeking to avoid transparency on their climate-related financial risk, with regulation of disclosure a key theme throughout the past 12 months, which made it the final member of our Top 10. Countries from Switzerland to the US (Coverage here and here) promised change, and the banking sector became increasingly aware of these possibilities.
- Germany to overcome climate aims deficit with more renewables, hydrogen
- Pakistan needs better policy design for power sector to achieve decarbonization: experts
- Gas-fired power’s EU taxonomy “green label” raises bond risks: T&E
- China’s central bank begins pumping liquidity into decarbonization projects via new facility
- Methane reductions key to US climate agenda in 2022
- US Build Back Better spending plan scuttled by Manchin, but push to pass continues
- Biden administration expected to deliver on climate-related financial promises in 2022
- Chinese national carbon trading market off to a good start amid hopes of further reforms
RELATED INDUSTRIES & TOPICS
- Carbon & renewable energy
- Carbon Markets & Pricing
- Climate Change
- Coal versus Wind Competition
- Coal-fired Generation Retirements
- Energy Capital Investments
- Energy Environment Policies and Practice
- Energy Transition
- Environmental, Social and Governance (ESG)
- Government Bonds
- Government Policy & Regulations
- Greenhouse Gas (GHG) Emissions Management
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