COP 26: Lots of talk, now we need action

by | Dec 9, 2021 | Linkedin Articles | 0 comments

Leaders and delegates of nearly 200 countries and territories across the world met in Glasgow for COP26 amid a severe warning from scientists about the future of our planet: if we are unable to limit the rise in global temperatures to 1.5°C compared to pre-industrial levels, we are likely to see irreversible damage to our land and oceans, rising sea levels and more severe weather events. All of this would be catastrophic for millions of people around the world.

After two weeks of negotiations, the Glasgow Climate Pact (GCP) was agreed upon. The agreement contains several provisions that, although not legally binding, are commitments that should help reduce emissions.

The most significant parts of the GCP include:

  • “Phasing down” coal electricity generation and reducing government subsidies that artificially lower the price of any  fossil fuel.
  • Developed countries will donate $100bn a year of public and private funds to developing countries to help them switch to clean energy and cope with the effects of climate change.
  • Governments updated their pledges and goals for cutting emissions during next year’s COP27 summit in Egypt.

There were also major agreements outside of the GCP which included:

  • The US and China, the two biggest emitters of CO2 in the world, agreed to co-operate in “cutting emissions and addressing the climate crisis”.
  • Over 100 countries, covering 85% of the world’s rainforests, have pledged to stop and reverse deforestation by 2030.
  • Over 100 countries pledged to cut methane emissions by 30% by 2030 based on 2020 levels.
  • Over 40 countries have pledged to phase out coal power and end investment in new coal power plants.
  • Over 450 financial institutions controlling $130 trillion of assets signed an agreement to direct financing towards projects contributing to limiting the rise in temperatures to 1.5°C, achieving net-zero emissions, and away from fossil fuel developments.

Unfortunately, most of these pledges made outside of the GCP were not agreed to by the largest greenhouse-gas emitters. The US has not agreed to cut its methane emissions, neither did China or India, despite the warming effect of methane being thirty times greater than that of carbon dioxide. China and India also did not sign up to end new investment in coal power plants.

Despite this, all three did sign the GCP, after China and India successfully lobbied to change the wording of the pact from “phasing out” to “phasing down” the use of coal. This rewording is significant as coal is one of the most polluting fossil fuels and these two countries are the biggest consumers of coal in the world. Combined, they accounted for over 60% of the world’s total consumption in 2020. As a result, there are serious doubts among the scientific community as to whether the GCP and pledges made during COP26 go far enough to limit temperatures rising to 1.5°C.

Overall, the outcomes and agreements from COP26 are encouraging and, if fully implemented and committed to by governments, will reduce global emissions. As well as following through on commitments in the GCP, governments will need to create legislation and incentives to help generate investment opportunities for the $130 trillion available from financial institutions. The pledges made during COP26 are unlikely to be sufficient to bring emissions down to reach the 1.5°C warming goal. Whilst COP26 is a good start, more drastic cuts to emissions and stronger pledges will be needed at next year’s COP27 summit.

If you would like to find out about how we invest for a greener world through our Investing for Good portfolios, please contact your Wealth Manager or email enquiries@taylormoney.com

Written by Sam Chedzoy & Artem Dubas

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