COP26 Crucial in Setting Tone, Charting Course

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The UN climate talks in Glasgow later this year have been billed as the most important climate gathering since Paris in 2015. So what’s on the agenda at COP26 and will it live up to all the hype? Expectations probably need to be moderated somewhat. Unlike COP21 in Paris or even Copenhagen’s COP15, the upcoming “conference of the parties” does not have a big new deal on the agenda that can either sink or swim. Besides issues like finance and offsetting, much of the formal negotiations in Glasgow will center around procedural details to implement the Paris Agreement -- including its core "review and ratchet" mechanism designed to raise ambitions. COP26 is the first official juncture for countries to submit revised nationally determined contributions (NDCs) ahead of a global stock-take of efforts -- which would then set the stage for ratcheting up the next round of NDCs due in 2025. These steps are considered key for bridging the gap between current ambition and what’s needed to achieve the 1.5°C climate goal (NE Apr.29'21). However, the official Paris Agreement Work Program talks are only a small part of what goes on during the COP. On a deeper level, the outcome of the Glasgow gathering could greatly impact the tone around the wider energy transition -- just as the Paris talks accelerated the significant shift in the financial sector toward energy transition planning. Indeed, the talks can bring on board many non-state actors, from companies and investors to states and cities, to deliver new strategies for decarbonization. The UK, as the COP's host country this year, has an important role here in steering political declarations and launching new initiatives, as France did in 2015. Net-Zero Focus The UK, which is co-hosting COP26 with Italy, has put a strong emphasis on net-zero goals. To keep the 1.5°C ambition within reach “we need all governments to come forward with net zero targets,” COP26 President-Designate Alok Sharma said last week. And “we need countries to commit to take action to make these targets a reality, including putting an end to coal power and phasing out the sale of polluting vehicles,” he added. Powering Past Coal The UK has put coal on the agenda for both COP26 and the G7, which it is also hosting. Ahead of the main Jun. 11-13 meeting of G7 leaders in Cornwall, G7 finance ministers recently agreed to further accelerate the transition away from unabated coal capacity and phase out new direct government support for carbon-intensive international fossil fuel energy “except in limited circumstances.” They also pledged to “take concrete steps” toward “an absolute end” to new direct government support for unabated international thermal coal power generation by the end of 2021, including through OECD Official Development Assistance, export finance, investment, and financial and trade promotion support. They hope other countries will join this effort in Glasgow. Zero-Emission Vehicles On clean transport, the UK has also established a COP26 Zero-Emissions Vehicle Transition Council -- bringing together governments representing some of the world’s largest car markets -- to get the transition moving faster. This campaign is calling on governments to require all new cars sold within their markets to be zero-emission by 2040 or earlier (NE Mar.11'21). Another initiative, the COP26 Energy Transition Council, will also bring together energy ministers, leaders of multilateral development banks, and heads of expert agencies to accelerate the transition to clean power, including advancing green hydrogen. Finance and ESG Progress on finance will be key to the success of COP26, and could be important for unlocking advances in other areas, like carbon trading. “Promises made must be promises kept, especially the pledge by developed nations to mobilize $100 billion in climate finance annually by 2020,” UN Climate Change Executive Secretary Patricia Espinosa said recently. Climate finance provided and mobilized by developed countries for developing countries totaled $78.9 billion in 2018, driven by a rise in public climate finance, up 11% from $71.2 billion in 2017, while private climate finance levels stayed flat, according to OECD figures. Beyond financial flows, there’s a growing focus on efforts to “green the financial system” so that financial decisions always take climate considerations into account. This includes moves toward mandatory climate-related financial disclosures, endorsed last week by finance ministers from the G7 (NE Apr.1'21). This is based on work by the Task Force on Climate-related Financial Disclosures, itself launched at COP21 in Paris six years ago. Unfinished Business Negotiators are also tasked with finalizing some critical details of the Paris Agreement rulebook that remain unresolved. This includes provisions for carbon trading and offsetting under Article 6, as well as measures to promote transparency and allow for effective monitoring and verification of NDCs (NE Dec.19'19). To narrow down the list of options ahead of COP26, the UN is currently holding informal online technical talks from May 31-Jun. 17. Watch for progress on Article 6, which is a high priority. Parties are focusing on carbon offset system design elements including accounting mechanisms and environmental integrity. Ronan Kavanagh, London

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