The time for the COP26 is approaching after a year without a COP and many problems related to COVID-19. It feels like the climate action has fallen back behind issues like public health, vaccination, economic recovery, supply chain and energy crisis. But I am fairly optimistic when it comes to the COP26 and I am feeling hopeful.
My main expectation for the COP26 is to finalize the Rulebook on the Paris Agreement. A big part of this involves the agreement of the rulebook regarding Article 6. It is clear to almost all players involved that emission trading is a low cost and market driven opportunity for the parties to decrease emissions. Cap-and-trade systems have proven that they work and a vast majority of economists agree on the positive effect such systems have on the global emissions reduction. However, the fear of “getting it wrong” is there as some argue that if the rulebook on article 6 is not properly negotiated, it could “break” the Paris Agreement. Article 6 has proven already to be a tough negotiation topic and highly technical. The last two COPs (COP24 in Katowice and COP25 in Madrid) were not successful in bringing the issue to bed. However, it should be acknowledged that there has been a significant progress on the issue. Considering its importance (again – it could potentially “break” the Paris Agreement) it is good that the Parties did not go for the “rather bad deal than no deal”-approach.
Another topic will be climate finance (to somewhat quote Margaret Thatcher – “We want the money”). A number of developed countries have promised to arrange the climate funding of $100 billion annually until 2020 and as of now, we are $20 billion short of this amount. It is also to questionable if we are talking about “grants” and/or “loans”, which shall be considered part of the $100 billion promise. In any event, the parties will have some heated discussion about the “where is my money”-issue on the COP26. But a significant progress in this area might also allow parties to negotiate a fair and balanced deal on the Article 6 issue. After all, it is expected that emissions trading would generate some revenue for the parties, so why not reinvest parts of the revenue into climate mitigation and adaptation projects. Stayed tuned for how this develops.
More ambitious climate goals
Finally, it is time to address the elephant in the room – the latest IPCC report. To put it mildly, the report paints a disastrous scenario if no action is taken as soon as possible. In fact, the report goes so far to say that it is unrealistic to stay under the 1.5 ° C target and we should at least try to stay below 2 ° C. However, this would require from the parties to present much more ambitious targets, which is still to be seen.
The biggest emitter China has committed to climate neutrality in 2060, after a peak of its emissions no later than 2030. So, China would need until the end of the decade to make its economy more clean and climate friendly. In my view, it is unclear if that would be sufficient, if we look at the IPCC report and taking into account the necessity for an imminent solution.
The second biggest emitter – the United States – is still struggling to get President Biden’s climate agenda through Congress, and it looks like that would only happen if major legislation were taken out of the bill. So, Americans should decide – do we want to invest in education and colleges or climate? That sounds like a terrible choice, but no one can blame them. It’s not like the U.S. is the second biggest emitter and the biggest economy in the world.
So, it looks like (but we are still not sure if it will actually happen) that the EU is the only big player left to try to do something about the climate and lead the way in these dark times. Let’s hope for some good old European diplomatic solution.
Finally, we expect some countries (they know who they are ;)) to try to block the process and negotiate better deals for themselves. Let’s hope that it would not work so well for them this time.
Stay tuned for more on the COP26!