Was Glasgow a Cop Out?
Even before the ink on the Glasgow Climate Pact had yet dried, commentators were scrambling to decide whether the 26th Conference of Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC), hosted by the United Kingdom in Glasgow in early November had been a ‘success’ or a ‘failure’.
Most of the commentary was far from positive. Amnesty International’s response was typical of activist opinion when it described the outcome as a ‘catastrophic failure’. A Guardian columnist called it a ‘suicide pact’ and insisted that it had ‘failed’ because ‘success’ required a decision to ‘burn no more fossil fuels after 2030’. Negative sentiment focused especially on the softening of the language on coal and fossil fuel subsidies with the final draft changing a hard commitment to ‘phase out’ to a much weaker ‘phasing down’, at the insistence of the Indian delegation.
To some extent the conference organiser, the Government of the United Kingdom (UK), had only itself to blame for the ‘failure’ optic around coal because it had so vigorously promoted this objective. But the UK burns very little coal to provide grid power these days while India relies on the fossil fuel for nearly 80 percent of its energy.
At COP26, national governments were required to deposit updated Nationally Determined Contributions (NDCs), essentially their plans to reduce carbon emissions over the next five years, with the 2015 Paris Agreement’s goal of net zero emissions by 2050 in mind. Most countries made some sort of promise but these were a mixed bag. India, the world’s third largest carbon emitted announced at the actual gathering that it would only achieve net zero carbon emissions by 2070. China’s last minute NDC says its target date is 2060.
When all these promises were aggregated and fed into climate models, it became clear that the 1.5°C target would be missed, although quantifying the scale of the failure depended on whose model was being used. The International Energy Agency (IEA), for instance, suggests that 1.8°C is attainable while other projections range upwards to 2.4°C. ‘COP26 hasn’t solved the problem’, wrote the journal Nature.
Even the official press release was lukewarm, admitting, in the words of COP26 chairperson Alok Sharma, that the proclaimed goal of keeping temperature increases to below 1.5°C above pre-industrial levels was, ‘alive (even though) the pulse is weak and it will only survive (if there is) rapid action’.
But a metric which insists that COP26 be measured on a scale ranging from ‘success’ at one end to ‘failure’ at the other is inadequate to explain either what happened in Glasgow or what its implications are. It is far too crude an instrument. The Glasgow event is only one element in a vast tapestry which is still being woven, on a daily basis, by governments, business and citizens around the world. In this wider view of the human response to climate change, there is far more happening than a narrow focus on the Glasgow Climate Agreement would suggest.
Such a perspective misses especially the role of corporate business in the process. Prior to the 2015 Paris Agreement, it might have been argued that it was governments who were pushing business to reduce carbon emissions. The shoe is on the other foot now.
Almost half the privately owned global assets under management – US$43 trillion in a US$100 trillion industry – are in the hands of firms who have signed up to the New Zero Asset Managers Initiative. This group of 450 institutions – who includes BlackRock (the world’s largest private equity fund), HSBC, Vanguard, UBS and Allianz – has committed to ‘supporting emissions reductions in the real economy’. It would be all too easy to dismiss this as marketing rhetoric but these are all firms who have committed to foregoing returns from carbon unfriendly investments like coal mines and fossil fuel burning power plants in favour of greener alternatives.
Much of this development is driven by shareholder activism. Earlier this year, HSBC only averted a shareholder revolt by committing to end finance for the coal industry. Previously, the bank had lent US$15 billion to coal interests in the two years up to October 2020. Shareholders are increasingly being informed by activist websites like coalexit.org.
These asset managers may well be positioning themselves for returns in a future low-carbon regulatory environment but they have to be taken seriously. At this point it is they who are waiting for governments to catch up. They want to see a viable international carbon trade mechanism in place, greater certainty about the future mix of energy generation and a carbon accounting rule book. The Wall Street Journal quotes an investment manager from Actis, Lucy Heintz, as saying ‘If there is a framework and pathway that shows how the pieces fit together, that is what will really mobilize investment’.
Car manufacturers are also waiting for the politicians to catch up. At COP 26, automakers were asked to sign up to a pledge to outlaw the fossil-fuel burning internal combustion engine in ‘leading’ markets by 2035 and ‘globally’ by 2040. Four of the biggest – Volkswagen, Toyota, Renault-Nissan and Hyundai-Kia – refused to do so. Yet all of these companies have huge electric vehicle (EV) programmes.
The auto manufacturers believe this would be both impractical and hypocritical while most of the world’s energy (needed to recharge EVs) is still generated from fossil fuels. A Volkswagen spokesperson said: ‘We believe that an accelerated shift to electro mobility has to go in line with an energy transition towards 100% renewables’. Volkswagen has spoken for a decade of its commitment to a green economy, and has committed to not selling fossil-fuel burning vehicles in Europe after 2035 and is expected to surpass Tesla as the world’s top EV manufacturer by 2025. The company’s credentials are unassailable. By refusing to take the pledge in Glasgow it was ‘calling out’ the poorly-grounded bombast of the political class.
It is this sort of grounded sense of reality which suggests that COP26 has be taken seriously. It would have been all-too-easy for many of the delegates to have made easy pledges with little intention of sticking to them in practice. Yet the opposite appeared to be the pattern. Where national delegations saw difficulties, they raised them. This degree of honesty might be a little surprising, perhaps even suspicious. But it has one outstanding virtue: it makes hard bargaining over interests possible. That is the only way to secure a viable climate future.
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