The conference turned out to be rich in target figures from both countries and financial institutions – according to the results of COP26, about 89% of global emissions are already covered by net-zero ambitions, on account of emissions-leading countries in many respects becoming actively involved in the climate agenda. India, for example, declared its plans to become carbon-neutral by 2070. It may not seem so ambitious a goal, but even this commitment by India may have a significant effect: the country is in the top 3 for CO2 emissions and engaged in extensive mining of fossil fuels.
India was joined by other countries, such as Brazil, Nigeria, Thailand, etc. The Glasgow Financial Alliance for Net Zero (GFANZ), an alliance of financial institutions, which manages 40% of global assets, also announced its ambition to reach carbon-neutrality of its portfolios by 2050. Pension funds in Northern Europe and Great Britain also committed to invest 130bn USD into green energy and climate by 2030.
Accusations also took place. Developing countries demanded greater commitment and support from developed countries to reach their goals, while activists accused COP26 participants of hypocrisy and the conference of being ineffective. However, certain arrangements were made as a result, although not fully meeting the expectations of many parties.
The Future of Fossil Fuels
Coal turned out to be the most discussed fossil fuel of the conference. Although the global community has been pointing out the dangers of this type of fuel for some years now, and more than 40 countries whose energy balance depends directly on coal consumption agreed to completely abandon its use, the final statement on coal turned out to be something of a compromise: “To gradually reduce use of coal without capturing emissions.” In other words, no arrangements were made on the complete abandonment of coal. Discussions on “coal targets” were perhaps the hardest for leaders and left anybody who had expected some decisive actions on this issue less than impressed.
Discussions on other fossil fuels were also not neglected. Opponents and supporters of oil and gas managed to come to some kind of consensus “to phase out ineffective fossil fuel subsidies.” However, “the ineffectiveness of subsidies” remains at the discretion of each party.
Not United by Coal Alone
It's also planned to achieve climate targets by reducing methane emissions by 30%, a greenhouse gas directly impacting climate change. The agreement may become an incentive for changes in many economic sectors, including agriculture, one of the major sources of methane emissions (about 17%).
Also, some arrangements were made in relation to reducing deforestation by 2030. More than 100 countries comprising 85% of forest resources endorsed the initiative. Among them are Brazil with its Amazon rainforests and Russia with the largest temperate forests in the world.
Some ambitious goals were also set concerning transport (17% of global CO2 emissions). Six major automotive manufacturers (Ford, Mercedes, GM, Volvo, etc.) have agreed to end sales of new ICE vehicles by 2030; airline carriers promised to use more environmentally friendly SAF fuel. However, all this would require not only development of new fuel proposals on the market, but also provision of related infrastructure in countries where such alternatives as electric vehicles will only just be emerging.
Financial Promises and Regulation Mechanisms
Energy transition and achievement of climate goals require considerable financial investment. India alone estimates costs of 1T USD. Still, the expressed readiness of financial institutions and developed countries to fund the green transition is one of the most important results of the conference... the question remains how much the promise will be kept and who will coordinate the required flow of funds. This and other issues will apparently be addressed at COP27 in Egypt next year.
Next year will also be a reporting year for countries: they will have to report on climate targets and adjust them if necessary, in accordance with the agreement signed in Glasgow. This will now have to be done every year. Previously, all targets were reviewed once every five years.
The winning result was the agreement on uniform standards and rules on international trading in carbon units. This will allow avoidance of inconsistencies and misunderstandings in further communication on this issue.
Time to Act
The climate agenda is no longer merely an international dialogue. It is a reality for all states, business communities, financial institutions and the public. It is only the involvement and practical actions of all these parties that will make it possible to avoid the consequences of climate change and reach the cherished ambition of the Paris Agreement of 1.5 degrees.
The practice of sustainable development has already started to develop actively in Russia, including the climate agenda which plays a primary role both at the level of the state and business. However, some issues remain unresolved. What to implement, what to pay attention to, how to determine strategic directions and how economically feasible is it?
Moscow School of Management SKOLKOVO helps stakeholders to address these and many other questions and seeks to demonstrate the best sustainable development practices using its own experience.
