The UN Climate Change Conference in Glasgow, known as COP26, drew to a close last Friday after two weeks of intense media coverage and international scrutiny. We covered the highlights and key outcomes of COP26. The promises emerging from the conference span not only countries, but sectors and communities, although Australia’s role, which has been heavily lambasted, leaves much to be desired.
Key takeaways from COP26
- Governments are starting to pull their weight, committing to mid-century as well as interim net zero targets.
- There are promising industry-specific agreements relating to the clean energy transition across areas as diverse as forestry, methane, aviation and shipping.
- US$130 trillion in assets has been mobilised by financial institutions to drive clean energy investment.
- Coal is on its way out with most countries agreeing to phase it out in the 2030s and 2040s.
- The Glasgow Climate Pact was agreed, which articulates rules for an international carbon market, including an overall reduction in greenhouse gas emissions through a mechanism resulting in 2% cancellation of each credit traded.
Focus on top-down action
120 world leaders assembled at COP26, placing the emphasis of top-down action by reinforcing national government pledges to reach net zero by 2050 and, in some cases, setting more ambitious interim targets for 2030. Although Australia was criticised for not increasing its net zero target to 2030, it at least made it to the talks with a 2050 target, announced just days before the commencement of COP26. India was kind enough to set its net zero target as 2070, which would have made Australia look better if only India were not a developing country with a population that is many multiple times our own.
Key sectoral outcomes
One striking outcome of COP26 was the magnitude of sectoral pledges that were announced, covering areas as diverse as:
- forestry, when over 100 world leaders, including Brazil, agreed to end deforestation affecting some 85% of Earth’s forests by 2030 (to which Australia is a signatory);
- the Global Methane Pledge, aimed at reducing methane emission by 30% by 2030, supported by over 100 countries, together representing 40% of global methane emissions;
- the Breakthrough Agenda, which committed countries to work together to accelerate the clean energy transition by driving down costs in transport, power, steel and hydrogen (to which Australia is a signatory); and
- transport, in which there was significant movement towards net zero emissions, with declarations in the areas of aviation, vehicles (supported by a number of business and industry actors) and so-called green (zero emissions) shipping corridors, of which at least six are to be established by mid-2030 (and to which Australia is a signatory).
Another major focus of the conference was on climate finance and adaptation funding. Some US$130 trillion in assets was mobilised by financial institutions to drive investment in clean and green developments. However, developing countries were crying out for greater climate adaptation finance.
Last gasp for coal
Coal did not escape scrutiny, but Australia did escape scrutinising coal—at least for now. The Global Coal to Clean Power Transition Statement was introduced on Day 5 of the conference and commits signatories to scaling up clean technologies and power generation, concomitantly reducing the reliance on coal-fired power. The ACT Government duly signed up, though this begs the question of exactly what role it expects to play, given the dearth of coal projects in that Territory. The outcome of the background negotiations at COP26, which resulted in the Glasgow Climate Pact, included a reference to ‘phasing down’ coal—though this was weaker than what had originally been hoped for. This provides some relief to Australia’s struggling—though (at least for now) essential—coal industry.
Glasgow Climate Pact
The Glasgow Climate Pact, a binding document, achieved more than simply referencing coal. It also:
- committed countries to strengthening their emissions reduction targets for 2030 by 2022. Australia is under particular scrutiny given the flack it copped for not strengthening this target at COP26 itself;
- urges developed countries to double their climate adaptation funding by 2025;
- finally establishes long-awaited rules for a global carbon market under Article 6 of the Paris Agreement, including:
- the transfer of carbon credits created under the Kyoto Protocol Clean Development Mechanism (though these credits are much maligned as lacking environmental integrity);
- an agreement to ensure there is no double counting of carbon credits (ie the country selling them cannot also use the credits to offset its own emissions);
- a minimum 2% cancellation of each credit traded under the new market, to ensure an actual overall reduction in emissions. However, analysts argue that 2% is too inconsequential, and that bilateral emissions reduction agreements will undermine this given they are exempt from this cancellation policy;
- overall, this mechanism provides flexibility to Australian businesses wishing to offset their emissions, as they gain access to a global carbon credit market for approved projects, allowing the burden of net zero to be more appropriately shared; and
- commits countries to reduce greenhouse gas emissions by 45% of 2030.
Where to now?
Somewhat hearteningly, the latest International Energy Agency assessment found that the pledges and promises at COP26, in addition to other targets made outside the conference, put us on a warming trajectory of 1.8 degrees Celsius. It should be noted that not everyone agrees—UN secretary-general Antonio Guterres being one and Climate Action Tracker considering 1.8 degrees an ‘optimistic’ scenario. Indeed, this trajectory remains a mere fantasy unless those pledges and promises are actually implemented.
That is the point we are at now: the 2020s is the decade to deliver, in which governments, businesses and communities must make good on their net zero targets and strategies. Australia is co-leading the Net Zero Industries Mission, a pledge to reduce emissions for heavy industries like steel, cement and chemicals, with further information expected to be published in 2022, which will play an important role in figuring out ways to decarbonise emissions intensive sectors. This mission naturally aligns Australia with its key energy and resources industries, which are looking desperately at how to decarbonise operations, as well as keeping in step with the Federal government’s reluctance to take a firm stance on coal, preferring to focus on the ‘technology’ to get to net zero. It remains to be seen whether this will be sufficient.