COP26 is positioned by its organizers as a critical moment for global engagement to mitigate and adapt to climate change, especially after its postponement in 2020 due to COVID-19 and recognition of the need for a green recovery. Growing calls for private sector participation in the “Race to Zero” may impact business standards on sustainability operations and/or investments in low-carbon technology moving forward. This CMI policy series provides an overview of COP26 and a summary of its challenges, successes, and outcomes so stakeholders can prepare for, and leverage those outcomes in the months and years to come.
Installment One: What is COP26?
Defining COP and What Success Looks Like
The 26th session of the Conference of Parties (COP26) to the UN Framework Convention on Climate Change – the international summit to accelerate governments’ commitments to tackle climate change – will take place in Glasgow from October 31st through November 12th. Since 2015, COP has been used to track governments’ commitments to the Paris Agreement, an agreement to limit global warming to 1.5 degrees Celsius. 191 countries, plus the European Union, have committed to the Paris Agreement, agreeing to reduce carbon emissions and work together to adapt to the impacts of climate change, strengthening their climate change commitments over time. Heads of State usually announce their climate change commitments, known as nationally determined contributions (NDCs), at COP.
Participation of Key Countries
President Biden has stated he plans to attend COP26 in person, along with 13 U.S. cabinet members and senior administration officials, including senior climate advisers Gina McCarthy and John Kerry. While President Biden brings a large delegation, it was recently reported that Russian President Vladimir Putin will not attend the summit in person, and Chinese President Xi Jinping will unlikely make the journey to Glasgow. The potential absences have caused some apprehension about the success of COP26 deliverables and may make it harder for the UK, COP26 co-host, to secure big commitments to reduce emissions. At a recent event, Prime Minister Boris Johnson noted concerns of meeting commitments, stating “I’m very worried, because it might go wrong and we might not get the agreements that we need. It’s touch and go.” The UK has publicly pushed for major greenhouse gas (GHG) emitters to announce net zero emissions targets at COP26, but has been met with resistance from key parties like India, the third biggest GHG emitter after the US and China, and Australia, the world’s top coal and major gas exporter. A recent UN analysis has found that nations’ “formal emissions targets submitted… even if implemented, would fall well short of the [Paris] deal’s benchmarks for holding global warming in check.”
Specific COP26 Goals and Outcomes
With the uncertainty of success, the UK has formally identified four goals:
1. Secure global net zero by mid-century and keep 1.5 degrees within reach
2. Adapt to protect communities and natural habitats
3. Mobilize finance
4. Work together to deliver
Under Goal 4 – “Work together to deliver”, governments will focus on finalizing the Paris Rulebook, detailed rules that make the Paris Agreement operational. In particular, there has much debate over Article 6 of the Rulebook, which outlines ways countries can voluntary contribute and cooperate to mitigate climate change. One of those options involves “the use of internationally transferred mitigation outcomes towards nationally determined contributions” i.e. carbon emissions trading. It has been observed that creating a framework for carbon trading could potentially lead to the establishment of a global carbon price. The use of a global carbon price as a tool to lower emissions was referenced in the G20 Finance Ministers and Central Bank Governors Communiqué in July 2021, and has been debated in the business community as one way for countries to monitor and verify carbon emissions.
Of particular interest for business will be private sector’s potential contributions to Goal 1 – securing global net zero by mid-century and Goal 3 – supporting the mobilization of $100 billion by 2025 to support low-and middle-income countries’ mitigation and adaptation strategies.
In the next installment of COP26: What You Need to Know, CMI will discuss COP26 goals and their potential impact on the private sector.
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