Alex Smith, Co-Founder of Vala portfolio company The Sustainability Group, discusses the key outtakes from COP26, how the world has changed since, and what we can expect from COP27.
In order to understand the focus of COP27, we need to review the overarching narrative that emerged from COP26. And it was not a simple one.
Firstly, the deal agreed upon—the Glasgow Climate Pact—wasn’t universally celebrated, nor condemned. It won’t save the world, but it does do enough to make a positive change.
Then we have the new Global Energy Alliance for People and Planet (GEAPP) which was launched to accelerate investment in green energy transitions and renewable power solutions in developing and emerging economies worldwide. This is an important step to aligning countries on the future of sourcing energy and how it is distributed and used.
But then tag on the long-running conversation on carbon markets and their regulation, which is one of the most contentious issues of the Paris Agreement (and still yet to be agreed upon), and we find ourselves in a milieu of differing opinions which impacts the ultimate goal of reducing emissions.
It becomes even more complex if you include everything that happened on the sidelines of the official negotiations. For example, the private sector made big commitments to facilitate the energy transition and slash emissions; countries committed to ending illegal deforestation; and the U.S. and China said they would collaborate on climate issues.
Whilst these all sound positive we need to trust that no shortcuts are taken and that countries can follow through on their commitments.
Russia and Ukraine
It would be remiss not to mention the impact of this war in Europe and worldwide. There has been significant upheaval leading to energy and food prices skyrocketing, which is contributing to the cost of living crisis affecting the UK and many other countries. However, for most of us, it doesn’t feel like much has changed in terms of turning the commitments into action.
Africa and the Planet
Last week, President Biden signed a bill that includes a package to invest USD $375bn to fight climate change – the most significant federal investment in history on the issue. Yet, at the same time, Congo agreed to auction off land to oil companies with their president Felix Tshisekedi stating that their “priority is not to save the planet.” And this is in spite of attending the Global Climate Summit in Glasgow and endorsing a 10-year agreement to protect its rainforests. Why did he do/say this? Because the deal could bring in USD $32 billion and earn enough revenue to help the struggling nation finance programs to reduce poverty and generate badly needed economic growth. The economic impact for Congo in selling its oil reserves outweighs its wants and needs to prioritise the planet at this moment in time.
This begs the question: How can Western countries, which built their prosperity on fossil fuels, demand that Africa and other developing countries forgo their oil, coal and gas reserves to protect everyone else?
Climate Justice
This has brought to the fore the topic of Climate Justice and the increasing requirement to find solutions to the climate crisis that, not only reduce emissions or protect the natural world but that do so in a way which creates a fairer, more just and equitable world in the process.
Multiple health and security crises, amplified by the climate and biodiversity crises, are now putting the sustainable development agenda at risk. As the SDG Index highlights, since 2019, these crises have halted progress on sustainable development worldwide.
Egypt and the World – COP27
As we look to COP27, to be hosted by Egypt, the agenda includes:
- Emissions – How will countries strengthen their Nationally Determined Contributions (NDCs) to cut greenhouse gas emissions by 2030 and limit warming to 1.5C?
- Just transition – How do we achieve a just transition to a net zero economy that ensures the Group of 20 (G20) gives the promised $100 billion a year to help developing countries tackle climate change and close the climate adaptation gap?
- Green Finance – What role do business and finance play in investing in projects that will ease the transition to net zero?
- Ending Coal Power – How do we accelerate commitments to phase out coal power and drive the focus on renewable energy production?
- Carbon Trading – Can the rules on trading carbon emissions be agreed?
- Carbon Offsetting – How can we progress and set global standards for carbon offsetting?
Egypt has stated that climate finance must be at the top of the COP27 agenda and has made clear that governments will need to activate the commitments they made. If COP26 was about making promises, COP27 is about how to fund them.
COP27 – all about Green Finance
Work to turn the pledges of climate finance from rich countries into projects on the ground, to help developing countries has also been slow. Rania Al Mashat, Egypt’s minister for international cooperation, said: “Some countries have difficulty gaining access to finance, and that must be addressed with new ways of “de-risking” finance to attract private sector investors.” Suggestions have been made that this could be done through governments providing guarantees, or other assurances, to private lenders or co-investing with them.
Regions with the most ambitious climate pledges, such as Europe and the USA, can do more to bring the cost of capital down for international climate finance and redirect investment away from fossil fuels. Clearer policy signals to industry, encouraging a more sustainable path forward can also accelerate decarbonisation to the lengths necessary to stay aligned with the Paris Agreement. Whatever action is taken, it will need to be done at pace.
Whether on the official agenda or not, another big talking point at COP27 will be the issue of “loss and damage”. First discussed in 1992, when the United Nations Framework Convention on Climate change was approved, there has long been an agreement that global warming causes disasters that can not be mitigated or adapted to. However, there is no agreement on how or even if the damage caused by these disasters should be compensated for by wealthier countries.
Developing nations bear the brunt of the impact of these environmental and humanitarian disasters and argue that it is crucial that climate financing and financial compensation flow from wealthier countries. We will have to wait and see if the geographic location of the conference lends weight to the discussions and if the politics align with the ambitions and calls for equity from the global south.
As the countdown clock to COP27 ticks down, it will be crucial that countries are held accountable to the pledges they made in Glasgow, that efforts and finances are scaled to adapt to our warming world and climate solutions are put in place across all sectors and geographies. Transparency will also be key if we are to limit global warming to 1.5C, and support those who are already living with the consequences.
Implementing policies designed to accelerate green energy is no longer an option. Incremental steps and a reluctance to phase out the past is no longer an option. To keep this goal within reach, countries, governments, investors, businesses, and everyone on Earth must start taking action and not just talk about it at conferences.
Alex Smith, Co-Founder and Partner, The Sustainability Group.
