UK Prime Minister Boris Johnson launched an international pact signed by 40 countries and organisations including the EU, China, US, India to make clean technologies the most affordable, accessible, and attractive choice globally by 2030. The agenda takes a sectoral focus on ‘Glasgow Breakthroughs’, with annual global reviews in each sector starting in 2022:
A notable new supporting initiative is ‘The Breakthrough Energy Catalyst’ programme, which aims to raise $3bn in concessional capital to catalyse $30bn of investments to reduce clean technology costs and create markets for green products for green hydrogen, Direct Air Capture, long-duration energy storage, and sustainable aviation fuel.
There are a whirlwind of new alliances, pacts and taskforces to navigate in the world of climate finance targets, standards and capital. We’ve broken down the key takeaways from the last two week’s announcements below.
Glasgow Financial Alliance for Net Zero (GFANZ)
Former Governor of the Bank of England Mark Carney declared the initiative had been backed by more than 450 financial institutions across 45 countries and had leveraged up to $130 trillion of private finance to help global economy’s transition to net zero, in alignment with the Paris Climate Agreement goal of limiting global warming to 1.5oC
Climate Transition Taskforce
On Tuesday 2 November, over 100 countries signed up to the pledge to end deforestation by 2030. Backed by £7.2bn of new private funding, the pledge increases the committed amount to a £14bn mix of public and private finance. Key signatories include Brazil, Indonesia, Colombia, and the Democratic Republic of the Congo, which together contain 85% of the world’s forests.
28 countries also committed to remove deforestation from the global food trade, and over 30 financial institutions, including Schroders and Axa, pledged to end investment in deforestation-linked activities.
The US and EU announced a global pledge to limit methane emissions by 30% compared to 2020 levels. The Global Methane Pledge now has 110 signatories, and accounts for over 50% of anthropogenic methane emissions and 70% of the global economy.
Leading emitters include natural gas production, cattle, and agricultural farming industries. While no specific funding amounts or sectoral policies have been confirmed, we can expect greater detail to come.
More than 40 countries and 22 organisations including HSBC, NatWest, and Lloyds Banking Group, signed up for the UK’s pledge to end all investment in new coal power generation domestically and internationally.
Major economies committed to phase out coal power in the 2030s while poorer nations agreed to follow suit by the 2040s. However, there was significant disappointment that major coal producers and consumers including the US, Australia, India, and China (which made a related pledge in September) are not party to the deal.
Glasgow Climate Pact
After two weeks of intense negotiations, in the eleventh hour, intervention by India and China blunted a commitment by 197 countries to end the use of coal. The key compromise was to change the commitment’s wording from “phase-out” to “phase-down”, arguably placing far less urgency on the intensity and timeline with which signatories will reduce coal use.
Nevertheless, the pact represents historic global governmental consensus on the imperative to reduce coal use, the first COP agreement to do so, with countries also compelled to strengthen their unilateral carbon-cutting targets by the end of 2022.
Negotiations surrounding the historically contentious issue of international carbon trading markets under Article 6 of the agreement made good, although somewhat compromised, progress in Glasgow.
New comprehensive accounting rules for the international transfer of carbon market units – crucially, the introduction of “corresponding adjustments” – will help shut down the notorious problem of emissions ‘double-counting’, whereby the buyer and seller both claim a carbon offset to buttress their net zero credentials. Now, only the buyer can use transferred emission reductions.
Alongside many governments, financial institutions, and local governments/metropolitan areas globally, 11 automotive manufacturers including Volvo, Ford, General Motors, and Jaguar signed a declaration on accelerating the transition to 100% zero emission cars and vans by 2035 in leading markets and 2040 globally.
To achieve this, governments committed to adopt policies to enable, accelerate, and incentivise the transition, automotive manufacturers committed to align their business strategies and build consumer demand, and financial institutions agreed to make capital and financial products available to enable the transition for consumers, businesses, charging infrastructure and manufacturers.
The COP26 summit in Glasgow may have ended on a sombre note, with many seeing the “phase-down” commitment as a watered-down pledge indicative of the difficulties in leveraging global consensus on the urgency required to tackle the climate crisis. For the UK, Natasha Clark, Political and Environment Correspondent at the Sun, told MHP Mischief,
“for the PM the further headache is how he sells green policies to voters, many of whom care about the environment and climate change, but don’t want it to hit them in the pocket.”
Mark Babington, Executive Director of Regulatory Standards at the FRC commented,
“there is a real focus on ensuring COP26 delivers tangible outcomes, and therefore yes, I think there is real commitment, and real buy-in [from Government] to do that”
Mark Landler, the New York Times London Bureau Chief said,
“if we emerge from this COP with some sense of how climate finance works, how emissions reduction targets are measured [then] I think it will be seen as a successful COP”
See our full interviews with Mr Babington and Mr Landler here!
All in all, the summit laid bare the tensions in global efforts to tackle global warming, with many debating whether it is fair to expect developing countries with fewer financial resources to make the same pledges as more developed nations, and whether developed nations need to do even more on climate finance to alleviate historic injustices in the global climate agenda.
Nevertheless, progress has been made. Building global consensus on the need for greater and faster action is a challenging process and whilst this COP may have concluded with an unsatisfactory climate act, through such an intensely public process, the summit has escalated the narrative on fossil fuel use, biodiversity, and Global South engagement and support to an unprecedented degree.
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