COP26 in review: our 5 takeaways
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As COP26 enters its final stretch, many of those here in Glasgow are in a reflective mood, considering what has been achieved at the summit — and the huge amount that has not.
One thing on many people’s minds is the unprecedented business presence at COP26, and the corresponding influence that big companies have had on the conversation on the ground. For Jules Kortenhorst, a veteran COP-goer and head of the influential non-profit consultancy RMI, businesses’ interest in climate action is much welcomed — but also a trend to be handled with care.
Kortenhorst told me that he met with more Fortune 100 chief executives at COP26 than at the previous 10 UN climate summits combined. “For 15 years I’ve been coming to this party,” he said. “Now new friends are showing up at the party, and that is encouraging . . . They’re quickly learning where the bar is, and how to dance, but we’re not yet 100 per cent sure that they can be good partygoers.”
The key, Kortenhorst said, would be serious measurement and accountability mechanisms to gauge businesses’ progress in mitigating their environmental impact. That was a significant focus of the Big Read that Andrew Edgecliffe-Johnson and I wrote this week, which looked at the rising scrutiny that has accompanied the explosion of corporate messaging on climate action.
As this is the last of our special daily editions during COP26, below, Gillian and I consider the summit’s five biggest talking points. Business leaders and investors — and anyone concerned with the financial angles on the climate story — will need to keep these issues front of mind in the months ahead. As COP26 draws to a close, you’ll find the FT climate team’s latest coverage here. And we’ll be back in your inbox on Wednesday. Thanks for reading.
Day 11 in brief
The Beyond Oil & Gas Alliance, led by Denmark and Costa Rica, added six new members to its effort to shift away from oil and gas production and exploration.
Alok Sharma, COP26 president, said there was “still more to be done” on the summit’s draft text and hinted that discussions may go past the end of COP26’s official discussions.
Nuclear power has traditionally been seen as “villain number one”, but it has gained traction as a plausible solution towards a transition to net zero, writes the FT editorial board. A mea culpa by Gillian on an encounter with the IAEA head at Glasgow also sparked a flood of comments.
COP26 looks set to fall short of achieving the serious global breakthroughs needed to tackle the climate crisis — but it has provided plenty of food for thought for those tracking the business and economic implications. Check out Gillian’s column — and here are Simon’s hottest topics from the past two weeks in Glasgow:
1. Carbon pricing
Six years after Article 6 of the Paris agreement set out the basic principles for a well-functioning international carbon market, it’s far from clear that COP26 will move the world much further towards implementing them. But there seems to be an emerging consensus on the need to substantially expand and strengthen existing carbon pricing mechanisms — and to create entirely new ones — to align businesses’ and consumers’ economic incentives with the drive for a lower-carbon economy. Expect increasingly tough scrutiny of the voluntary carbon offset market, and a more prominent debate around the rollout of carbon tax regimes.
2. Assessment and transparency
In the months leading up to COP26, there was a striking pick-up in complaints of “greenwashing”, and warnings that companies must deliver credible, short-term action alongside their lofty, long-term environmental goals. There has been a huge focus in Glasgow on the need for better mechanisms to assess corporate progress on this front. Executives and investors will need to pay close attention to initiatives such as the IFRS Foundation’s new International Sustainability Standards Board. And those relying on voluntary offsets to achieve their net-zero goals should be prepared for much tougher standards.
3. Energy security
The global energy crunch leading up to COP26 has inevitably had an impact on the conversation at the summit, and related concerns will remain live in the months ahead. It has been a big obstacle to accelerating the demise of coal-fired power, particularly in China. And with governments also nervous about the supply of liquid and gas fuels, that’s a headache for those hoping to see a rapid phase-out of the trillions of dollars in subsidies dished out to the global fossil fuel industry.
In the past fortnight there have been some intense conversations about the technology that could prove crucial in the climate battle. One especially hot topic is nuclear power. The UK and French governments, for example, are stepping up their focus on nuclear as a significant plank in the global climate response, while some in the environmental movement remain leery. Another area of controversy is hydrogen: expect more arguments over the need to ramp up funding for “green” hydrogen — which uses renewable energy-powered electrolysis — and whether there is any place for “blue” hydrogen, which is derived from natural gas. The debate is picking up, too, about the storage systems that will be required as part of renewable-heavy electricity grids. Should the world focus on scaling up large-scale lithium ion batteries, or on potentially more efficient, but still emerging, alternative technologies?
5. China-US relations
The joint climate announcement by the US and China on Wednesday was one of the important moments of a summit that has been short on significant developments. It followed more than 30 meetings over the past year, as Leslie Hook and Ed White noted in this excellent FT analysis. Unlike the 2014 climate agreement between presidents Xi Jinping and Barack Obama, this announcement did not feature any firm commitments, although China promised a plan to tackle its methane emissions. One encouraging development was the announcement of a new bilateral working group, paving the way for more intensive discussions between the world’s two biggest emitters. Optimists will hope that the dire need for climate collaboration can mitigate the tensions between them. Others will worry that those tensions could undercut hopes of serious global action.
Quote of the day
UN secretary-general António Guterres called for continued progress on climate agreements as the official COP26 policy discussions come to a close.
“1.5 degrees is still in reach but [it] is on life support . . . hope should be sustained until the very last moment. I still hope for a big push today and tomorrow for an agreement on increased ambition.”
Beyond Glasgow: The worldview
Geopolitical tension between the US and China remains, but at least one area in which there is “more agreement between China and the US than there is disagreement”, is climate, according to China’s top climate policymaker Xie Zhenhua.
The angst that exists between the world’s two largest economies is downplayed in the newly signed agreement that sets the US and China on a path to boost climate co-operation. But the question remains whether the bilateral pact will lead to action.
As part of the statement, China pledged to begin addressing its methane emissions, but the agreement otherwise had little in the way of details. This is on top of the fact that President Xi Jinping failed to attend the conference in Glasgow and the country has dragged its feet on agreeing to phase out coal.
Still, China has expressed frustration that its climate action has not been “appreciated”. This week, Wang Yi, a senior adviser to the Chinese delegation, told The Guardian that the criticism on China was “based on incomprehension or misunderstanding”.
China Daily, an English-language daily newspaper owned by the Chinese Communist party, wrote on Thursday that China had demonstrated “goodwill” through the climate agreement, which could help to address the “protracted, though fruitless, blame game going on between Beijing and Washington”.
Meanwhile, Xi said in a speech to Asian business leaders that China would “strike a balance” between the green transition and the living needs of its people, as he reinforced China’s call for rich nations to step up their climate-related support for developing ones. “Developed economies should act on a sense of being in the same community with other economies,” he added.
Under the new China-US “working group” to be set up under this week’s agreement, this bilateral climate conversation is set to continue despite the wider strategic tensions — and China will hope that it may yet make the world “appreciate” its green agenda. Kristen Talman
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