International Cooperation

COP26: The Glasgow Climate Pact

The Glasgow Climate Pact. COP26 closed late on Saturday with the adoption of the ‘Glasgow Climate Pact’ by the 197 parties (196 countries and the EU) to the UN Framework Convention on Climate Change (UNFCCC). The full text of the main Pact is here

  • Main elements. Carbon Brief have written a comprehensive analysis of the Glasgow Pact and other COP26 decisions and announcements. New Economy Brief Managing Editor Michael Jacobs summarised the main elements of the Pact in a Twitter thread
  • Reaction. UN Secretary-General Antonio Guterres issued a sober welcome for the agreement. “Our fragile planet is hanging by a thread. We are still knocking on the door of climate catastrophe. It is time to go into emergency mode — or our chance of reaching net zero will itself be zero.” Edie collated reactions from civil society organisations including Greenpeace, WWF, the Corporate Leaders Group and C40. ECIU’s Sepi Golzari-Munro tweeted a short evaluation of the deal and European Climate Foundation head Laurence Tubiana set out priorities for COP27, which will take place in Egypt in November 2022.

Mitigation and returning in 2022. On emissions reduction (‘mitigation’), the agreement acknowledges that current national commitments are insufficient to put the world on a pathway to limiting global heating to 1.5C above pre-industrial levels. It instructs countries to come back in 2022 with strengthened commitments for 2030, in line with the “well below 2C” and ideally 1.5C goals set out in the 2015 Paris Climate Agreement. The planet is already 1.2C warmer: NASA’s Earth Observatory explains what rising average global temperature means

Fossil fuels. The Glasgow Climate Pact calls for “accelerating efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies.” No dates for this are given, but Greenpeace and others hailed the first ever mention of reducing fossil fuels in a COP document as a signal that “the era of coal is ending.” International lawyer Harro van Asselt explains why the text is significant even if it is weaker than hoped. 

Climate finance. ‘Climate finance’ refers to money provided in different forms from advanced economies to countries in the global South. (The FT explains here.) Developed countries pledged in Copenhagen in 2009 and again in the Paris Agreement that they would mobilise public and private funding of $100bn a year by 2020. They failed to hit this target (providing $80bn in 2019) but say they expect to hit it in 2023. As the Jubilee Debt Campaign noted, over 70% of this finance has been in the form of loans, not grants, which add to the debt burdens of lower income countries

  • Total finance flows. In Glasgow developed countries resisted the demand that they make up the shortfall since 2020 by providing more in 2024 and 2025. The text sticks at $100bn a year, and sets up a new process to define how much they should pay after 2025. 
  • Finance for adaptation. For many years poorer countries have expressed anger that around 75% of climate finance has gone to mitigation efforts, such as renewable energy, rather than on adaptation to help them cope with the climate change they are already experiencing. The recent UN Environment Programme report on financing for adaptation estimates that the costs for vulnerable countries to adapt to global warming are up to ten times higher than available funding. In the Glasgow Pact the vulnerable countries achieved their demand that developed countries should “at least double” funds for adaptation. 
  • The overall finance package. The Glasgow Pact calls on the World Bank and other multilateral development banks to improve access to climate finance for climate-vulnerable countries, which can be penalised by their (in some cases) higher GDP per capita and perceived high-risk investment conditions. Senior COP26 adviser Amal-Lee Amin argues that COP26 has made progress. Citing the new financing and reform agreement between South Africa and several developed economies to help South Africa transition away from coal, COP26 “provides a solid foundation for a comprehensive new climate finance framework post-2025”.

Loss and damage. In UN climate negotiations 'loss and damage' is the term used to describe the principle that rich countries should compensate poor ones for the climate costs their historical emissions have caused. For many countries in the global South this is central to climate justice. Developed countries have always resisted it; they fear it is the slippery slope to being held liable in international courts for trillions of dollars in damages. In Glasgow the vulnerable countries wanted a new financing facility to be set up for loss and damage. This was not agreed: there is to be merely a ‘dialogue' to discuss 'arrangements'. Power Shift Africa’s Mohamed Adow expressed the widespread anger at this: “The needs of the world's vulnerable people have been sacrificed on the altar of the rich world's selfishness.” Developing countries vowed to return to this at COP27 next year. 

Carbon markets. 'Carbon markets' in climate change agreements allow rich countries to buy 'offsets' (such as tree planting) to avoid the cost of reducing emissions themselves. Such markets have been controversial since first being allowed under the 1997 Kyoto Protocol. Article 6 of the Paris Climate Agreement defined them further and COP26 was meant to finalise the rules. The Glasgow Pact closes some loopholes over double-counting, and sets somewhat stronger standards for environmental integrity and protection for indigenous peoples. But there is only partial cancellation of credits left over from the old Kyoto Protocol (which many people think should simply be retired), and only a partial cap on new ones. A 5% levy to go to adaptation will cover only some trades. With two different trading systems created it is feared the weaker one will predominate. Clean Energy Wire explains what has been agreed. Carbon Markets Watch criticises it.  

And the rest. Beyond the issues mentioned above, COP26 completed the ‘Paris Rulebook’ of detailed rules to implement the Paris Agreement, such as on the transparency of national actions and measurement. This will allow for full implementation of the treaty. Some other notable developments were on:

  • Special Drawing Rights. One of the most interesting developments at COP26 arose from the powerful speech (watch it here) made by the Barbados Prime Minister Mia Mottley in the Leaders’ Summit. She called for the IMF to issue annual tranches of SDRs, the global reserve currency, to finance climate-compatible development in the most vulnerable countries. Some of the SDRs issued this year in the light of the Covid pandemic are already meant to be reallocated for development (but have not yet been). Mottley’s adviser Avinash Persaud explains the new proposal.
  • Countering greenwash. There was widespread concern in the run-up to COP26, and at it, that various companies are claiming to be committed to achieving net zero emissions but are in fact using dubious measurement and large-scale use of offsetting. (The Guardian’s Damian Carrington explains.) At COP26 the UN Secretary General announced that he was setting up an Expert Group “to propose clear standards to measure and analyse net zero commitments from non-state actors.” This was widely welcomed.
Weekly Updates

Local economies

Double Devolution. Onward released a new report calling for the “radical expansion of neighbourhood control through town and parish councils”. It argues that the Government’s forthcoming ‘Levelling Up’ White Paper should increase democratic representation of communities in local government decision making. 

  • Beware of ‘community power’. Keir Milburn, Bertie Russell and Kai Heron argue in Novara that the recent adoption of the community empowerment agenda by the centre-right is a “strategic move to try and develop a Conservative agenda that moves beyond so-called zombie neoliberalism ...the Tories’ version of community empowerment ensures that nothing essential changes about capitalist property relations”. The author’s point to their recent proposal for Public-Common Partnerships as a way to democratise ownership and urban development.

Trainspotting. A campaign led by media organisations based in the North of England have called for greater investment in inter-city lines to and across the North, including a demand to deliver Northern Powerhouse Rail in full. (See Onward’s dataset showing how many jobs are reachable by car and public transport - “exposing a shocking transport gap between North and South”.) 

Inequalities and migration

Gender Pay Gap. The Women’s Budget Group (WGB) published a briefing on the gender pay gap in the UK. Commenting on the latest ONS measure of employee earnings, WBG identify recommendations for closing the earnings gap, such as improving pay for part-time work and offering equal opportunities for career progression, normalising flexible working arrangements and developing a universal, free childcare system. 

Racial diversity in economics. To mark its two year anniversary, Felicia Odamtten, founder of The Black Economists Network (TBEN), explained the implications of a lack of diversity in economics: “A lack of diversity in the profession can exacerbate the lack of attention paid to the issues faced by particular communities, and ultimately lead to poor decision-making and negative outcomes for these communities.”

Ethical guidelines for immigration officials. The Home Office published its ethical decision making model” arising from its Windrush Lessons Learned Report. Immigration expert Colin Yeo questioned the implications of the new guidelines for those “operating a bureaucracy of such systemic inhumanity”.


Environment Bill passes into law. The UK has a new Environment Act 2021. It requires the government to set long-term, legally binding targets on air quality, biodiversity, water, resource efficiency and waste reduction. It creates a new Office for Environmental Protection intended to hold ministers and public authorities to account if they fail to comply with environmental law. It bans selected single-use plastic items and establishes a new “comply or explain” mandate for UK businesses which risk deforestation in their supply chains. The ENDS Report details what’s in the Act, what isn’t, and why

  • Watered down? Many provisions desired by environmentalists were removed from the bill, including the strengthening of protections for ancient woodlands and habitats and a legal duty on water companies to stop discharging raw sewage into rivers. After a House of Lords revolt the Bill was amended to require companies to deliver a “progressive reduction” in sewage discharges. Media coverage of water companies’  pollution record has again exposed the UK’s privatised model of water company ownership. Tax Watch’s George Turner explains how privatisation has led to underinvestment and debt. We Own It called for the nationalisation of water companies to reduce both pollution and the extraction of profit by shareholders.

Industrial strategy

GDP figures and the UK’s slowing recovery. The TUC’s analysis of quarterly GDP data suggests that the growth of 2.1% below pre-crisis level in the third quarter of 2021 makes the UK’s recovery the weakest in the G7. Read chief economist Geoff Tily’s commentary on the twenty industries in the worst and best positions

Lessons from the vaccine success story. IPPR’s George Dibb appeared in front of the Treasury Select Committee to repudiate the Prime Minister’s claim that the Oxford/Astrazeneca vaccine success was driven by capitalism and greed. Dibb argued it was in fact a combination of long-term public investment and private sector innovation, which had important lessons for UK industrial strategy in scaling up production in fields such as battery vehicles and building retrofits. 

Macroeconomics and finance

UK inflation and interest rates. Andrew Bailey, Governor of the Bank of England, told the House of Commons Treasury Committee he is “very uneasy” about inflation due to “tight” labour markets (where a shortage of workers drive up wages), but wants to see the effects of the end of the furlough scheme before voting to increase interest rates. 

Green QE. The Bank of England (BoE) announced it is greening £20bn of its Corporate Bond Purchase Scheme (CBPS) “to support an orderly economy-wide transition to net zero”. Read the outline and principles of the BoE’s approach which includes a commitment to reporting on the climate impact of their investments. 

Britcoin. The Bank of England and the Treasury will launch a consultation next year on the creation of an official UK digital currency, popularly known as ‘Britcoin’. But they warned that even if agreed, it would not be established until the “second half of the decade”. Positive Money’s Simon Youel argued that this may be too late, risking surrendering the future of money to tech giants such as Facebook: “Central bankers...should be acting much faster to introduce new public digital currencies if we are to maintain any hope of having democratic control over our money and banking system”. (The Bank of England explains what a digital currency is here.)