COP26 – the future isn’t ready yet.

The Glasgow Climate Pact was agreed setting the global climate agenda for the next decade. The two week meeting was seen as a critical moment for commitments and action to stay below 1.5°C. Following two weeks of intense negotiations, our responsible investment team looks at what was achieved – and the huge amount that was not. Once again the conclusion seems to be, we need to act urgently….but not yet.

1.5°C is still alive, but current action and commitment isn’t putting us on that trajectory

The Paris Agreement says temperatures should be limited to “well below” 2°C above pre-industrial levels, and countries should “pursue efforts” to limit warming to 1.5°C. Before COP26, the world was on track for 2.7°C of warming¹  and announcements at COP26, including new pledges to cut emissions by some key countries have reduced this to a best estimate of 2.4°C².

A world warming by 2.4°C is still clearly very far from 1.5°C, and there is a gulf between countries long-term net zero goals and actual plans to deliver emissions cuts this decade. To bridge this gap, the Glasgow Climate Pact requests countries publish updated plans by the time COP27 begins in Egypt next year in line with what is needed to achieve 1.5°C. Although welcome, high uncertainty remains on countries’ ability to deliver and implement these pledges in full and in time. 

History is made on fossil fuels, but the language is watered down at the last minute

The agreement “calls upon Parties” to accelerate efforts to “phasedown unabated [i.e., without CCUS] coal power and phase out inefficient subsidies for fossil fuels”. Although the wording was significantly softened compared to the first version of the draft – shifting from ‘phase-out’ to ‘phasedown’ – this was still a significant moment as it is the first time that the final text explicitly refers to coal and fossil fuels and the need rapidly to reduce these to tackle the climate emergency. However, it is clear that countries most reliant on coal remain reluctant to take more ambitious commitments, particularly in the current context of energy crisis, for instance India setting 2070 as its target to reach Net Zero. 

Important agreements on Methane and Deforestation, but other issues ignored  

The climate conference also saw a number of countries joining the commitment by the EU and US to cut methane emissions by 30% by 2030 under the Global Methane Pledge. While China - the largest methane emitter globally - has not formally joined the pledge, it signalled its intention to address the issue in a joint-statement with the US. These are positive developments, but we note that the targeted reduction of 30% remains below the recommended 40 to 45% cut by the Climate and Clean Air Coalition in its latest Global Methane Assessment. 

Additionally, 137 countries representing 90% of forest areas have endorsed the Glasgow Leaders Declaration on Forests and Land Use to “work collectively to halt and reverse forest loss and land degradation by 2030 while delivering sustainable development and promoting an inclusive rural transformation.” This pledge is welcomed, in particular due to the importance of taking a holistic perspective to climate change that addresses the relationship between different issues.  

Nevertheless, given countries failure to deliver on their deforestation and biodiversity commitments in the past, we remain sceptical. More broadly, other important issues such as water received considerably less attention – despite their intrinsic link to climate security and limiting global warming to 1.5°. At EdenTree, we signed the landmark Glasgow ‘Fair Water Footprints’ Declaration in recognition of the importance of water in decarbonisation.  

Insufficient progress made on climate equity 

The effects of climate change are not felt equally and developing countries have been calling for funding to pay for “loss and damage”, such as the costs of the impacts of extreme weather events which has been caused by warming from developed countries. However, developed countries – led by the US and the EU – have resisted taking any liability for these losses and damages, and vetoed the development of a new Loss and Damage Facility to support vulnerable nations. This is a disappointing outcome and, alongside the huge protests of young people demanding to make their voices heard, underscores the need for a greater focus on climate equity and a just transition.

We have been here before. The UN climate Conference of the Parties began its global endeavour at COP1 in Berlin as long ago as 1995, with rare exceptions (Kyoto in 1997, and Paris in 2015) progress has been punishingly slow. COP26 has, perhaps predictably, left much to be desired – among other things, there is still no global price on carbon, we haven’t agreed to phase out fossil energy or coal, and we have not agreed how to finance the transition for developing nations. Yet beyond the headlines and the action taken – or lack thereof – it is important to also recognise the extraordinary momentum now underway in the private sector. With swarms of business executives at this year’s conference, Glasgow may well be remembered as the turning point when companies from all sectors turned their full attention to driving decarbonisation. We look forward to COP27 when it gathers next year in Sharm El-Sheikh.