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Issues to watch at COP26: The global view
With COP26 a few days away, Net-Zero Business Daily reached out to leading companies, analysts, environmentalists, and trade groups for their perspective on the upcoming meeting in Glasgow, Scotland, asking: What needs to be accomplished? Will those goals be met?
IHS Markit pointed out in a recent report that the global energy market price surge and energy supply shortfalls have changed the dynamics of COP26.
Conferees will have to balance the pressures of immediate demands for energy with the urgency to set strict and enforceable long-term rules to reduce carbon emissions and mitigate the impacts of climate change.
Time is short though, as the Intergovernmental Panel on Climate Change's August report made frighteningly clear.
In this second of a two-part series, experts from around the globe offer their observations and expectations, including on whether it should even be taking place. A US perspective was explored earlier this week.
Climate Bonds Initiative Co-founder and CEO Sean Kidney
The big win of the year was at the Biden climate summit, when the major economies, especially China, the US and the EU, came together around necessarily ambitious 2030 targets. They are the economies that have to change if we're to meet our climate targets; the rest will follow.
We will see a series of announcements about plans to achieve those targets. That's a start.
But what we really need—what a marker of real success would be—are announcements about big change projects: a bad bank to soak up stranded coal and gas assets; a $3 billion fund to buy out the world's fishermen (including giving them a good pension) and let the oceans recover; mandating minimum levels of urban farming to allow big cities to keep feeding themselves in the crises and pandemics that come with the extreme climate change we now face.
And support for most vulnerable that are starting to feel the pain.
The crazy boom in the green and sustainable bonds market—now at $2.5 trillion outstanding—tells us big investors want to invest in the solutions. They need opportunities to go green. That's perfect for governments, who can now use fiscally efficient measures and green bonds to get capital flowing to the solutions that meet targets.
Things are dire, drastic climate change has really started, but I'm also optimistic the shift to green has really started.
Michael Graff, Chairman and CEO, American Air Liquide Holdings
One marker of a successful COP26 would be a focused, universal dialogue on decarbonized hydrogen production and the policies needed to expand its use globally.
At Air Liquide, we believe that public policy plays a critical role in the clean energy transition. There is an urgent need for governments worldwide to champion policies that will catalyze the production and deployment of low-carbon and renewable hydrogen. A successful framework should include policies that increase the scale of low-carbon hydrogen production methods in a technology-neutral way, expand the production of low-carbon hydrogen through carbon capture, utilization, and storage and renewable natural gas, drive investment into hydrogen-fueled heavy duty and fleet vehicles, and incentivize the use of hydrogen in traditionally hard-to-decarbonize industrial sectors.
Commitment to and progress on these issues is achievable during COP26, and key to unlocking hydrogen's full potential to support an efficient and cost-effective clean energy transition.
GE Renewable Energy CEO Jérôme Pécresse
Success at COP26 will be twofold: reaffirmation of more aggressive targets towards the growth of renewable electricity, and just as importantly, getting back on track with existing targets, Pécresse said in response to a Net-Zero Business Daily question at a National Press Club event 28 October in Washington. It is just as important to hit 2030 targets as it is to announce more aggressive 2050 targets, he added.
A.P. Moller-Maersk Regulatory Affairs Director Simon Bergulf
Concrete commitments on maritime transportation. That´s what we expect from the global leaders to be gathered in Glasgow. Concrete commitments to mirror the ones made by industry. Not just Maersk, but for example, the announcement 19 October by some of the world´s biggest retailers, including Amazon, Ikea, and Inditex, to only transport goods via zero-carbon ocean freight by 2040.
Concrete commitments that enable, guide and force global [regulatory] organizations like the International Maritime Organization (IMO) to speed up the establishment of imperative market-based measures—of at least $150 per metric ton of CO2 equivalent emitted. Concrete actions to accelerate the urgent transition to green fuels.
Incentivization of fossil fuels must stop now—we need to incentivize renewable fuels such as green methanol and ammonia. We also need global regulation to incentivize the right behavior and create a truly level playing field that expedites the transition to sustainable fuels at the so-much-needed rate.
The green transition is a joint obligation. Technologies are already available in the market. Carbon-neutral solutions for container vessels exist—green methanol and green ammonia. Customers are calling for the decarbonization of their supply chain. We now need to create the right environment for scaling these solutions.
We need a clear signal from COP26 to the IMO and commitment from world leaders to take as active a stance in the IMO as they likely will do at the COP.
International Emissions Trading Association (IETA) Policy Director Andrea Bonzanni
At COP25 in Madrid, IETA promoted a badge reading "All I Want for Christmas Is Article 6," which was worn by numerous delegates and became a trending topic on Twitter. Two Christmases later, Article 6 [a central UN mechanism to trade emissions credit reductions] is still on our wish list.
Article 6 is much more than a Christmas present to yearn for, though. An agreement on rules to operationalize the cooperative mechanisms foreseen by Article 6.2 and 6.4 of the Paris Agreement will have a lasting impact on decarbonization pathways, international financial flows, and ambition levels.
Unfortunately, parties [to the United Nations Framework Convention on Climate Change] failed to agree on a rulebook at the last COP, but the draft text that emerged from Madrid provides a solid foundation. In a number of discussions this year, parties expressed their expectation that rules allowing the immediate operationalization of Article 6 could be adopted in Glasgow.
Parties and stakeholders increasingly acknowledge that harnessing the potential of international markets through Article 6 mechanisms is fundamental to increasing ambition and delivering net-zero at a substantially lower cost than exclusively through nationally focused action.
Karen Orenstein, director of the Climate and Energy Justice Program at Friends of the Earth
First off, given the deeply unequal access to COVID vaccines and the subsequent inability of many government and civil society representatives from the Global South to travel to Glasgow, COP26 should not even be taking place next month. It should be postponed.
That being said, COP26 would be successful if developed countries commit to absolute reductions by 2030 that are in line with their fair share of the mitigation effort to limit global temperature rise to 1.5 degrees Celsius. These same countries should also pledge to immediately stop subsidizing fossil fuels, deforestation, and methane-spewing agribusiness, and instead provide the trillions of dollars that developing countries need in the face of the climate crisis. This is what science and justice demand, but, no, this is not going to occur.
HSBC Asset Management Head of Sustainability Erin Leonard
Nature has great beauty and is central to our culture and well-being. Yet in recent decades, it has been destroyed at an unprecedented rate, with significant negative consequences for both our planet and economies.
Natural capital [or the world's stocks of natural assets including geology, soil, air, water, and all living things] provides a string of services to mankind, which are essential to the preservation of life on earth. One hundred years ago, it was recognized as one of the three means of production, alongside capital and labor. But for much of the period since, this asset has been ignored.
Economists are now reappraising natural capital. Nature is no longer free and there is a growing need to understand its value, and create a price for it, just like we have done for carbon.
We see COP26 as a vital moment to bring the importance of natural capital back to center stage. Nature Day on 6 November will highlight the importance of natural resources in the battle against climate change.
Work is well underway to position natural capital as an asset class, but there is still much to be done to translate the values and complexity of nature into financial terms to enable investment by retail and institutional investors globally. There are a number of opportunities for COP participants to increase support for nature.
Investors need the same level of transparency on nature-related risks as they will soon have on climate risk. Therefore, we look for governments to signal their support for the Task Force for Nature-related Financial Disclosures, raising it to the same prominence as the Task Force on Climate-related Financial Disclosures.
We also look for delegates to confirm support for initiatives such as the Finance for Biodiversity Pledge, the Net-Zero Asset Managers Initiative and the UK Government Deforestation Commitment. Collective action and support for these initiatives are vital to shifting the flow of funds away from nature-negative outcomes to nature-positive ones and to securing the crucial participation of the private sector.
With its challenging agenda, COP26 is a critical moment for global climate action. But it is also a huge opportunity to reinstate nature as an asset class and a source of value.
International Chamber of Commerce Secretary General John Denton
This is very much the moment for governments to step up and match the ambition being shown by leading companies and investors.
To do this, COP26 needs to deliver three essential outcomes. First, a genuine commitment from the world's richest countries to close the climate finance gap for developing economies without delay. Second, a critical mass of actionable national climate action plans that send a signal to markets that governments are serious about achieving net-zero emissions by 2050. And, finally, a robust and workable agreement operationalize Article 6 of the Paris accord.
Leaving this latter element on the table in Glasgow would be a huge mistake given the potential for international emissions trading to dramatically cut the costs of decarbonizing the global economy.
Sujith Kollamthodi, director of consultancy Ricardo's policy, strategy and economics practice
A good outcome from COP26 would see countries that are responsible for the highest levels of GHG emissions raising their levels of ambition to reduce their emissions more rapidly and to follow through on this ambition with concrete actions. Concrete actions need to include very clear policy signals, and increased investment in technologies to achieve deep decarbonization.
More broadly, all countries need to demonstrate a greater commitment to adapting to the impact of climate change. All of this points to the need to increase the levels of climate finance that can be mobilized globally to support a pathway to keep global heating below 1.5 degrees C. There is currently a significant shortfall in climate finance compared to the existing commitment of $100 billion from 2020 onwards. I would hope that during COP26, countries in the Global North (technically and socially well-developed countries) commit to increasing the amount of climate finance they will mobilize—at the very least to match the amounts they have previously committed to.
A good outcome at COP26 would also see a greater commitment to action from sectors that are not on track in reducing emissions sufficiently to help us to stay below 1.5 degrees of global heating—in particular, the international shipping and aviation sectors need to take more and faster action to control their GHG emissions.
Rio Tinto spokesman Simon Letendre
Many of the sustainability challenges facing our industry and the planet require collective action to solve. COP26 is a key opportunity for governments, NGOs, and industry to come together to raise their ambition and agree on tangible and coordinated solutions to address climate change and its impacts on communities.
In this spirit, Rio Tinto is raising its ambition and taking actions to decarbonise. In October 2021, we announced plans to reduce our Scope 1 & 2 carbon emissions by 50% by 2030, more than tripling our previous target. A 15% reduction in emissions is now targeted for 2025, five years earlier than previously. These targets are supported by around $7.5 billion of direct investments to lower emissions between 2022 and 2030, notably to develop innovative technologies to produce green steel and aluminium, and to deploy wind and solar power.
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