COP26: A crucial climate conference

Glasgow meeting is world’s last chance to embark on a net-zero pathway by 2030

8 September 2021 Wai-Shin Chan, Head of HSBC’s Climate Change Centre

The COP26 climate conference starting 31 October is widely seen as the world’s last chance to get onto the net-zero emissions trajectory by 2030 and limit temperature rises in line with the Paris Agreement. The task has been made more urgent by increased scientific evidence of human-induced climate change and recent record-breaking extreme weather events.

But the challenges are huge. A successful COP26 would result in an acceleration of climate policies – unlocking incentives for investment to reduce emissions and build resilience. But failure would increase uncertainty over the prospects for avoiding the severest impacts of climate change, irreversible damage, and the climate response becoming ever costlier to address.

The 2015 Paris Agreement, ratified by 191 parties covering 96 per cent of global greenhouse-gas emissions, set an aim of keeping the rise in global average temperatures to well-below 2°C above pre-industrial levels, and preferably to 1.5°C. The Paris rulebook dictates how it is to be implemented.

The previous two COP meetings did not finalise the details, and with last year’s conference postponed because of the pandemic, the Glasgow conference must settle the outstanding issues.

One key issue is Article 6 of the Paris Agreement, which covers co-operation in implementing climate pledges. Emissions saved or avoided in one country can, through a carbon-credit system, be used by others to meet their own targets. But that requires definitions of who can sell how much of what to whom, and when. So there must be a monitoring body and an accounting system that avoids double-counting.

Meanwhile, Article 6.4 covers a carbon-trading mechanism for contributing to the mitigation of greenhouse-gas emissions and supporting sustainable development. However, rules that make sense for one party may not be acceptable to another.

Problems include whether emission reductions would have happened anyway, or whether gains in one place cause losses elsewhere. Further, should parties holding a large number of emissions credits from the old ‘Kyoto’ framework carry them into the new system? Resolving this issue will be extremely difficult because there is almost no middle ground.

And what about emissions-reduction strategies that do not result directly in a carbon credit but which still enhance carbon or energy efficiency, such as removing fossil-fuel subsidies? Or what happens to emissions-reduction credits if the reduction is reversed – say if fire destroys a forest?

Previous COP meetings agreed that individual climate pledges should be implemented from 2031 onwards with common time frames. But how long should each pledge last? We think Glasgow could allow flexibility of duration and starting points.

Finance will be another sticking point. Developed countries had agreed to provide USD100 billion to developing nations by 2020 but this promise has not been met – making future promises on emissions reductions and transparency harder to come by.

Finance is often used a leveraging tool in climate negotiations. But to complicate matters, COP26 will begin discussions of a new post-2025 collective finance goal.

Many other issues – procedural, operational or administrative – will be discussed in Glasgow. But if countries do not co-operate, then politics will triumph over policy and the outlook for the planet will be much bleaker.

 

First published 7th September 2021.

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