As Climate Talks Near, Expectations Intensify

Copyright © 2021 Energy Intelligence Group

With just over two months to go until the start of UN climate talks in Glasgow, expectations for the talks are coming into sharper focus as diplomatic preparations intensify. Billed as the most important climate negotiations since the Paris Agreement was sealed in 2015, COP26 represents the first formal point in the Paris framework where countries are being asked to increase ambition in their Nationally Determined Contributions (NDCs). This will be a key test of the accord's "ratchet and review" mechanism which is designed to close the gap between countries' current collective ambition and the emissions cuts needed to meet the lofty Paris Agreement goals (NE Jun.10'21). There are some reasons to be optimistic, with a growing number of countries committing to net zero and businesses, including oil companies, embracing strengthening emission reduction targets. The energy transition looks increasingly unstoppable too, as renewable energy costs continue to tumble. However, the UN warns we are still on course for a temperature increase of 2.4°C above preindustrial levels by the end of the century, with a recent climate science report from the IPCC reinforcing climate concerns (NE Aug.12'21). Keeping 1.5°C alive is the headline priority for Glasgow, with all countries being asked to submit ambitious new NDCs as well as long-term strategies to get to net zero by midcentury. So far 81 countries plus the EU 27 have submitted new NDC targets -- with around 53% of the world’s economy now covered or due to be covered by net-zero goals. Glasgow Road Map As the ambition gap likely won’t be closed by the Glasgow talks, at least as the negotiations currently stand, the UK, the COP26 president-designate, is already preparing the diplomatic groundwork for agreement on a road map to keep 1.5°C in reach. This could set out some concrete steps that could be taken to get there. These include carbon pricing, fuel subsidy reform, transport solutions such as zero-emission vehicles, technologies such as hydrogen and nature-based solutions. Old King Coal There are growing calls, too, for COP26 to tackle methane emissions from fossil fuel production, which were highlighted by the recent IPCC report. Yet phasing out unabated coal power remains the top priority, with the UK wanting to ensure that COP26 “consigns coal to history.” The G7 group of leading economies has agreed to this, however efforts to get the broader G20 on board have stumbled, highlighting the challenges ahead (NE Jul.29'21). Coal-dependent India is among those pushing back. Delhi argues that although its outright emissions are rising, per capita they are still only a fraction of developed countries, which also have the greatest historical emissions. India and other developing countries believe that it is only fair that richer countries thus carry the larger share of the burden, while also providing climate finance resources and green technology transfers to help poorer countries develop their economies sustainably. Finance Stronger commitments on climate finance will be critical to progress in Glasgow. As with all such “conferences of the parties,” decisions will be reached by consensus and can be blocked by any party -- with developing countries the largest bloc at the talks. Developed countries will be compelled to at least make good on their promises -- made in Copenhagen in 2009 and reaffirmed in Paris in 2015 -- to mobilize at least $100 billion in climate finance per year by 2020. This has still not been met, with rich countries only contributing around $79 billion in 2018, according to OECD figures. The $100 billion per year should only be the floor and not the ceiling, according to developing countries, which also want more funding to scale up adaptation finance to help them prepare for climate disruption. They argue that adaptation should be put on parity with mitigation efforts to reduce emissions. There are also calls for the climate negotiations to better address the threat of loss and damage from climate change and help compensate for this, with many countries around the world already challenged by escalating extreme weather events. Paris Rule Book As much as negotiators want to move onto new priorities, they must also first address some unfinished business in finalizing the Paris rule book -- which is designed to make the agreement operational. This includes some accounting and transparency measures, which are central to the “review and ratchet” mechanism. Carbon trading is another sticking point, with no agreement yet on Article 6, which covers market and nonmarket approaches. Key issues here include measures to avoid the double counting of emissions and to ensure that markets deliver additional reductions and not undermine the ambition of the Paris Agreement. The fate of old Kyoto Protocol-era carbon credits is contentious too, with some highlighting the risk of allowing their continued use but others stressing the importance of enabling carryover of pre-2020 credits to retain investor confidence (NE Mar.11'21). Ronan Kavanagh, London

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