Looking Ahead
So COP26 happened. Deadlines were extended and nerves frayed. There were last-minute curve balls and even some tears. Commitments were made, and while some of their impacts were undoubtedly watered down in the small print progress was definitely made and we arguably ended up with a final document that was probably stronger than many would have expected. There are lots of great summaries of the COP26 outcomes – here and here are two of my favourites.
The ‘blah blah blah’ activists weren’t happy and nor should they be. They should never be satisfied, that’s the whole point of activism – putting pressure on those in power to be better at making difficult decisions.
If 2021 was all about COP26, what is there to look forward to in 2022? COP27 for starters. Usually after a ‘big’ COP there are three of four smaller ones until the cycle comes around again and the ratchet mechanism brings all the parties back to the table to improve on their commitments. Perhaps one of the most significant agreements made at Glasgow that didn’t get as much attention as it should have was that countries will come back with beefed-up Nationally Determined Contribution (NDCs) at Sharm El-Sheikh in November 2022.
And thank goodness! There remains a huge emissions gap – around 17 to 20 billion tonnes – between the sum of the NDCs and other commitments that have been made and the reductions needed to stand a realistic chance of a 1.5-degree world.
COP26 did show there is now a far greater sense of urgency amongst the international community, but the key question, as it always is, is will we see any meaningful action in 2022? The first of four parts of the IPCC special report published in August 2021 was unequivocal – we are in the age of anthropogenic climate change. The second part will be released next month and we can expect it to say that the impacts of climate change are more severe than expected and will get worse still. Two more reports will follow*
Climate denial in board rooms, whether out of convenient ignorance or in pursuit of profits is now untenable. With the tailwind (hurricane) of shifting consumer preferences, we can expect to see more numerous and significant actions from the corporate world and industry. More than two-thirds of global GDP is covered by net zero commitment, up from just 16% in 2019 (and this data is pretty old, it is likely even higher now) – sure there will be greenwashing, double counting and dubious exclusions in all that but it still has to a good thing. Don’t be fooled, companies are not doing this out of the goodness of their hearts or to score a few favourable headlines. The corporate world is waking up to the existential threat of climate risks and their potentially catastrophic financial implications. Self-interest is a fantastic motivator for action.
Net zero going viral has created a clamour for carbon offsets (think paying for some tree-planting or other nature-based solutions like habitat restoration when you book a flight). This is still an emerging market (a.k.a. a murky unregulated world where impacts might be unproven and greenwashing to a certain extent is inevitable), but an interesting by-product of this surge is that the price of carbon has spiked. The European carbon pricing mechanism shot to nearly $60 per tonne last summer and kept rising to end the year around $80 and has flirted with $90 already in 2022. For context, $100 per tonne is the point at which Greentech innovations start to really become financially interesting. Might there be a domino effect on the horizon? A universal price for carbon is still a very long way off (if indeed it can ever be achieved), but these are useful foundations that are incentivising more climate-friendly allocations of capital.
One thing that is certain is that no one, no company, no country can do it alone. Like COVID-19, climate change doesn’t respect borders – but the arbitrary way humans have chosen to divide up the surface of the earth has made tackling climate an awful lot harder. Concerted action, whether it be at a policy level or international conservation projects, is vital to fighting the climate crisis. Collaboration between countries to improve access to renewables will be vital for them to reach their emissions reductions commitments. There are lots of great examples already the North Sea Link and EcoPeace Middle East’s Green Blue Deal being just two.
As is so often the case on the geopolitical stage, the most important “it’s complicated” relationship is that of the US and China. As it happens, autocratic planned economies are rather good for long term planning, exactly what the climate crisis needs.
On the other hand, President Biden has a huge task getting his battered and bruised “Build Back Better” bill (which contains some $500bn in provisions for climate and clean energy) through Congress. The rest of the world has grown reticent of the US’s yoyo approach to environmental policy and of course the downside to a free and open democracy is that we just don’t know who will be calling the shots in 2025.
The two sides have been speaking, with positive murmurs, particularly around intellectual property, which would be a boost for Greentech innovations…
China has said it expects its carbon emissions to peak in 2030 and has made a net zero commitment for 2060. Spurred along by the current spiralling energy crisis, significant capital is flowing into renewables projects (these are not without their problems though, as any country downstream of the Chinese hydroelectric dams on the Mekong will tell you!). China is the factory or the world and the gargantuan manufacturing industry is responsible for an awful lot of carbon emissions. Emissions which are embedded in the supply chains of Western companies – all sides are incentivised to work together to tackle these
2022 is set to be an interesting year, there is a lot to watch but the world cannot afford to take its foot off the accelerator (while dodging some significant obstacles). I don’t know about you but I am cautiously optimistic that the world has tipped into the next round of the climate fight…
*Part three follows in March and will seek to simulate a variety of scenarios (or “socioeconomic pathways”) based on the world adopting differing levels of climate adaptation and mitigation measures. The fourth part will be a summary of the first thee expected in the autumn.