The Fuse

Progress at COP26, But Ambition Still Short of What is Needed

by Nick Cunningham | November 08, 2021

The pledges from the COP26 climate summit in Glasgow are coming in thick and fast, with new promises to transition to net-zero emissions and other commitments to cut financing for fossil fuels.

Taken together, new announcements could accelerate the clean energy transition. Nevertheless, the world is still badly off track in terms of cutting global greenhouse gas emissions at a rate that climate science demands.

New Glasgow announcements

Governments are rolling out spending on clean energy, and issuing new targets for emissions. India said it would aim for net-zero emissions by 2070. In the lead up to the summit, Saudi Arabia said it would reach that goal by 2060. Other nations, especially western countries that are richer and have a longer history as major emitters (and, thus, carry a larger responsibility) are aiming for mid-century.

On Thursday, a coalition of 21 countries, including the United States, announced that they would end the financing of overseas fossil fuel projects beginning next year. If it pans out, that would cut off at least $18 billion in financing for oil, gas and coal projects. Crucially, public financing for such projects tends to be pivotal investments that help projects clear the hurdle from conception into reality by funding projects that might otherwise struggle to get off the ground. As a result, removing this critical pillar of support for the old fossil fuel economy is a notable development.

A coalition of 21 countries, including the United States, announced that they would end the financing of overseas fossil fuel projects beginning next year.

A slew of other announcements also could move the needle. More than 100 countries signed on to a commitment to end deforestation by 2030. Another group of 100+ countries agreed to cut methane emissions – a powerful greenhouse gas – by 70 percent by the end of the decade.

In the lead up to the talks, the U.S. announced an agreement with the European Union that would embed carbon standards into their tariff policies on imported steel, subjecting steel from dirtier producers to tariffs. In practice, that could mean U.S. tariffs on imported steel from China, while easing tariffs on the EU. While light on details, the announcement could pave the way to climate action via trade policy.

Climate negotiations often feel like a Sisyphean task, and are typically characterized by inadequate ambition. Parts of the COP26 talks in Glasgow will no doubt be remembered this way. Greta Thunberg’s denouncing of world leaders a month ago (“we say no more ‘blah blah blah’”) sums up the sentiment.

And yet, there is and has been some progress. The International Energy Agency said on Thursday that if all the new commitments made at Glasgow are carried out in full, the world could be on track to keeping warming to 1.8 degrees Celsius. “This is a landmark moment: it is the first time that governments have come forward with targets of sufficient ambition to hold global warming to below 2 °C,” the IEA said.

If all the new commitments made at Glasgow are carried out in full, the world could be on track to keeping warming to 1.8 degrees Celsius.

Still short on action

Global leaders, including the U.S. government, view private sector financing as crucial to the overall effort. As the Wall Street Journal reports, mobilizing $4 trillion per year needed for decarbonization may sound like a lot of money, but it really isn’t. “The role of government is to create revenue streams or demand signals or even mandates that open up the markets so that the money comes in,” Bank of America Chief Executive Brian Moynihan told the WSJ. “If there’s a revenue stream, then the funding is infinite.”

Those “signals” are growing more significant. In addition to announcements on methane, forests, and public financing for fossil fuels, there was also a significant announcement from the world’s top financial institutions. On Tuesday, a coalition of more than 450 banks, insurers and other financial institutions, collectively managing nearly $130 trillion in assets, announced the Glasgow Financial Alliance for Net Zero (GFANZ). They committed to accelerating the goal of achieving net-zero emissions by 2050.

“We now have the essential plumbing in place to move climate change from the fringes to the forefront of finance so that every financial decision takes climate change into account,” Mark Carney, the former head of the Bank of England, who is leading the alliance, said in a statement.

But activists criticized some of the proceedings as insufficient, with too much greenwashing.

For example, Reclaim Finance, criticized the new GFANZ group because it does very little to meaningfully target financing for fossil fuels. Many of the same banks making the new commitment have spent trillions financial oil, gas and coal projects in just the last few years since the Paris Climate agreement. And they remain invested in dirty projects. In addition, the claims of “net zero” also depend very heavily on controversial carbon offsets. As Climate Home News reports, the head of Greenpeace interrupted Carney’s event, holding a sign that said “Your taskforce is a scam.”

Meanwhile, while 40 countries announced plans to phaseout coal, the world’s largest coal consumer, China, did not sign on. Neither did the United States.

More broadly, net zero targets that are decades into the future leave tons of questions about what countries are doing now and in the next few years. The global fossil fuel industry, wounded and facing decline, remains dominant for the time being.

Net zero targets that are decades into the future leave tons of questions about what countries are doing now and in the next few years.

The IEA, in its commentary noting the substantial progress underway, noted that the world is still far from the 1.5-degree track. And, importantly, there isn’t a great track record of countries sticking to their commitments. “Governments are making bold promises for future decades, but short-term action is insufficient,” the IEA warned.

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