The Importance of COP26
I’m writing from Glasgow this week, where there is a lot at stake with the United Nations climate negotiations currently underway, commonly known as COP26.
Nearly 200 countries signed the Paris Agreement in 2015, committing to limit global overheating to within 1.5°C of warming. But the latest United Nations Emissions Gap Report finds that commitments known as Nationally Determined Contributions (NDCs) ahead of the Glasgow talks only reduce emissions 7.5 percent by 2030, while 55 percent is needed to meet the 1.5°C Paris goal.
We have known about climate change since the late 1970s, with the advent of satellite temperature measurements and publication of the Charney Report, which estimated warming could reach between two and 4.5°C due to greenhouse gases emitted from the burning of fossil fuels. The latest IPCC climate report tells us that, without question, human-made carbon emissions are responsible for overheating the planet. But emissions have continued to rise, reaching 1°C over pre-industrial levels in 2017. Former Vice President Al Gore, director of the 2006 documentary “An Inconvenient Truth,” has used the language of “climate crisis” since the 1980s, and 2019 became the year of the “climate emergency declaration.”
The increasing urgency of the language used to describe climate change reflects the extreme high stakes we face as a society that is built on the assumption of a stable climate. We use historic climate data to determine where and when we plant our food, where we consider it safe to build our homes, where we locate critical infrastructure. But our models are now based on outdated weather patterns, and will no longer be a good indicator of future conditions. In Texas, a stretching of the Polar Vortex earlier this year shut down an electricity grid not built to withstand the extreme freezing temperatures, which we can now expect to see much more frequently. Small changes in average temperatures will have extreme consequences, such as flooding coastal cities and submerging entire island states. The small island state of Kiribati bought land in another country for its citizens, because the entire country could be under water if emissions are not cut in half within the next eight years.
Frequent and severe extreme weather events throughout 2021 have highlighted the human toll and economic consequences of global overheating. Canada is warming twice as fast as the global average. In British Columbia, we saw temperature records broken in the town of Lytton, reaching nearly 50°C before a wildfire destroyed the town and took two lives last summer. On the other side of the world in Pakistan, global high temperatures of over 50°C have been recorded, which is hotter than the human body can withstand.
We really cannot afford to ignore the climate emergency a moment longer. This week, Prime Minister Justin Trudeau announced a new NATO centre of excellence to study the security implications of climate change, during his pre-COP visit to Holland. The centre will help members understand how climate disasters could force mass migration and exacerbate conflict and war.
We knew that 2020 would present a point of no return in terms of the concentration of greenhouse gases in the atmosphere. After this, we reach certain climate “tipping points” from which it is very difficult or even impossible to return. Documentaries like Breaking Boundaries highlight that we are already outside the safe operating space for climate change and biodiversity, and we need an urgent revamp of our energy and food systems. We have just eight years left to reduce emissions 50% by 2030, a pathway that the International Energy Agency says is still available but closing fast unless we can halt all new oil and gas exploration and development immediately. The latest IPCC findings led UN Secretary General António Guterres to declare a “code red for humanity.” 2,500 scientists and academics have called for a Fossil Fuel Non-Proliferation Treaty, signed by universities and governments, and calling for an immediate fossil fuel phase out.
Key Agenda Items for a Successful COP26
1. Ensure that all Parties have submitted ambitious NDCs that can secure global net-zero emissions by mid-century and keep 1.5°C within reach.
To deliver on these stretch targets, countries must:
- Accelerate the phase-out of coal;
- Accelerate reductions in methane emissions;
- Curtail deforestation;
- Speed up the switch to electric vehicles; and
- Encourage investment in renewables.
For Canada, this means making more credible plans for reaching our 2030 target of 40-45 percent reductions in emissions, as well as having longer term plans for reaching deeper reductions by mid-century.
2. Agree on sources of climate finance so that developed countries can make good on the commitment to have reached $100bn in climate finance per year by 2020.
This deadline has been shifted to 2025, but developed countries must fulfill this pledge to help developing nations protect against climate change and accelerate decarbonization. Further delay has the potential to erode good faith and trust during the negotiations.
3. Increase collective efforts to address climate adaptation, e.g.: protect and restore ecosystems; build defences and warning systems; and develop resilient infrastructure and agriculture.
Most funding currently goes to climate mitigation efforts (i.e. emissions reduction), and metrics to track progress on adaptation are still poorly defined. Countries will need to work to improve the quality and comparability of metrics, for example with definitions, methods, and data that can be used to report on adaptation.
4. Finalize the “Paris Rulebook,” which sets out guidelines for the implementation of the Paris Agreement and the operation of carbon markets (also referred to as “Article 6”).
Article 6 plays a critical role in establishing clear and consistent rules that can allow carbon markets to accelerate decarbonization and shift investment from fossil fuels into clean energy. This Article establishes rules for transparency and avoiding double counting in the use of “internationally transferred mitigation outcomes” (ITMOs), which countries can use to count towards their NDCs. Article 6 also establishes market and non-market mechanisms to help achieve climate change mitigation targets at the lowest possible cost.
In the past, the Canadian oil and gas industry has argued that methane could be used as a “transition fuel” under Article 6, to replace higher emitting fossil fuel consumption in other countries, such as coal and oil. However, this approach misunderstands the way national emissions inventories are accounted for. Once Canada exports a product, emissions associated with its use (referred to as Scope 3 emissions), are not included in our national inventory, but are instead included in the national inventory of the country where the emissions are released. According to the Canadian Institute for Climate Choices, Canada has stepped back from a stated intention to use future Article 6 rules to gain credit for displacing fossil fuels in other countries, and has stressed the need to avoid double counting in international markets.
5. Mobilize private capital to enable the goal of global net-zero emissions and ensure that every financial decision takes climate into account.
This massive economic transformation requires public and blended finance to turn billions of dollars committed to climate investments through public channels into trillions of total climate investment. To this end, the COP26 Private Finance Hub is working on:
- Improving the quantity, quality and comparability of climate-related disclosures, based on the
- Ensuring that the financial sector can measure and manage climate-related financial risks using tools such as stress-testing.
- Enhancing investors’ ability to identify opportunities in the transition to net-zero, and report how their portfolios align with the transition.
- Increasing private capital to emerging and developing economies.
Mark Carney’s Private Finance Hub has called for private finance institutions to make clear commitments at COP, including credible commitment to net-zero by joining the Glasgow Financial Alliance for Net Zero (GFANZ), and urgently phasing out financing for coal.
Canada: Looking at COP26’s Summit
In Canada, the Office of the Superintendent of Financial Institutions (OSFI) has received feedback from financial institutions on the risks they face from climate change and the impact on their safety and soundness. OSFI and the Bank of Canada are also piloting climate risk scenarios to better understand the risks to the financial system.
In the weeks leading up to COP, the Canadian Securities Administrators (CSA) published for comment a Proposed National Instrument 51-107 which would require disclosure of climate-related matters. In February, CPA Canada partnered with the Prince of Wales’s Accounting for Sustainability Project (A4S) to deliver a principles-based guide that helps business valuators price climate change risks and opportunities for organizations. In fact, Canada has made a bid to host the international headquarters of the new International Sustainability Standards Board (ISSB). The ISSB will develop rules for how companies report on environmental, social and governance matters, although the US questioning of the broad approach proposed means that the ISSB will focus on investors to start, and begin with climate-related standards given the growing quantity of data in this area.
I’ll be reporting back on progress over the next few days, but in the meantime, we’d love to hear from you about your questions, or if you’re in Glasgow, what else you are seeing happening on the ground.