Side agreements. The first week at COP26 was dominated by a series of ‘side agreements’ choreographed by the UK Presidency. These are not formally part of the talks, but attempts to drive forward ambition in the real economy. Some observers have been pleasantly surprised by the number of countries involved in some of these and the funding committed to them. Others have warned however that many are weaker than the government has claimed. There has been a lot of criticism in particular of some of the business and financial ‘net zero’ announcements.
The ‘end of coal in sight’? Last Wednesday the UK’s Department for Business, Energy and Industrial Strategy issued a press release stating that “190 countries and organisations” had pledged to phase out coal. With countries pledging to end the use of coal-fired power stations, and both countries and banks promising to end their financing of new coal projects, the release said that “the end of coal is in sight.”
Ending deforestation by 2030? Presented as COP26’s first major deal on Monday, the UK announced an “unprecedented” plan to end (and then reverse) deforestation and land degradation by 2030. Signed by 110 countries (covering around 85% of global forests, and including Brazil, Indonesia, China, Russia and the Democratic Republic of Congo), the agreement included almost £14bn of public and private funds to restore damaged land, tackle wildfires and support indigenous communities.
Methane methods. US President Joe Biden and EU President Ursua von der Leyen announced that 90 countries had agreed to cut methane emissions by 30% by 2030. Methane, produced especially from agriculture, landfill and oil and gas, is a more potent greenhouse gas than CO2, so if implemented this would be significant. Climate physicist Piers Forster analysed the likely impact.
Fixing farming? 45 countries (or possibly 28) have committed to changing their agricultural policies to become more sustainable and less polluting, and to invest in the science needed for sustainable agriculture and the protection of food supplies against climate change. 95 major companies from a range of sectors committed at the same time to being ‘Nature Positive’, working towards halting and reversing the decline of nature by 2030. In their analysis of farming and climate change, Republic of Buzz argued that agriculture represented the “cow in the room” at COP26.
Green technology ‘breakthrough’? 40 countries, accounting for more than 70% of the global economy, have signed up to coordinate the global introduction of clean technologies, starting with zero-carbon electricity, electric vehicles, green steel, hydrogen and sustainable farming. Governments agreed to align their standards and coordinate investments to scale and speed up production. The aim of the ‘Glasgow Breakthroughs’ is to accelerate the ‘tipping point’ when greener technologies become more affordable and accessible than fossil-fueled alternatives.
Glasgow Financial Alliance for Net Zero. Former Governor of the Bank of England Mark Carney announced that financial institutions with $130tn of assets would align their portfolios with the Paris Agreement’s goal to limit global warming to 1.5°C. The Glasgow Financial Alliance for Net Zero (GFANZ) includes more than 450 banks, pension funds, insurers and asset managers across 45 countries and covers 40% of global financial assets.
Is 1.5°C still within reach? Prior to COP26, the UN warned that the ‘nationally determined contributions’ (NDCs) which countries had made for 2030 added up to a global emissions total which would likely put global temperatures on a trajectory to a 2.7°C rise. Much attention was taken in the first week when Fatih Birol, Director of the IEA, tweeted that the side agreements announced could limit heating to 1.8°C. But this was quickly criticised.
Closing the finance gap. On climate finance, the CVF are also demanding that (a) the rich countries provide $500bn over the five years 2020-2024; (b) 50% of this is for adaptation; (c) there is an annual accountability mechanism to see exactly where the money has gone. The $100bn financing goal for 2020 agreed in Paris is not expected to be met till 2023, so the $500bn would entail more than this in 2024 and 2025.
BoE votes to maintain interest rates. The Bank of England’s Monetary Policy Committee (MPC) voted to hold its base rate steady at 0.1%, though the decision was not unanimous (7-2 vs 9-0 last month. IPPR’s Carsten Jung explains why rising interest rates would harm economic recovery and fail to reduce inflation, which is largely being driven by supply side factors such as energy prices). PEF’s James Meadway explains the risks to the MPC’s credibility “if the Bank decides to incrementally raise interest rates but fails to materially influence inflation”.
Credit policy and the ‘debt shift’. Economists Josh Ryan-Collins and colleagues have published a peer-reviewed paper exploring the decline in share of bank credit to non-financial firms from 60% in 1970 to 40% in 2005. The authors hypothesise that “liberalised credit markets will tend towards the financing of existing assets (especially property) given the uncertainty associated with the financing of business, and the weaker collateral provided”. So policymakers should revisit credit policies to support mission-oriented policy goals, such as the low carbon transition. (Twitter thread summary).
A 1.5°C pathway for the insurance industry. Common Wealth’s Miriam Brett examines how the insurance industry facilitates climate breakdown and how it can be transformed “from an engine of extraction and exploitation into a vehicle to support a just transition”. (Twitter thread summary here.)
EU digital rules and the regulation of Big Tech companies. Facebook whistleblower Frances Haugen appeared in the European Parliament in advance of the EU’s vote on the Digital Services Act. Haugen proposed methods to regulate the algorithms of Big Tech companies which amplify disinformation, and their business models based on surveillance advertising.
Which local authorities are most in need of a ‘just transition’? The Centre for Progressive Policy found that 9 million people are vulnerable to a “bad transition” to net zero and identified the top 74 areas in Great Britain at risk of economic disruption. The research develops a series of indicators for assessing the local authorities at highest risk of increased unemployment, lower wages and reduced economic activity from decarbonisation.
Pessimism as a spur to action. Economist Nick Stern has written a new paper criticising the use of high ‘discount rates’ in policy making, which “grossly undervalue” the lives of future generations and present children. Commenting, James Meadway explains why “shocks that produce permanent losses in growth increase the value of taking action today.”
Climate scepticism in the media. Veteran environment reporter Geoffrey Lean criticises the “simplistic, often formulaic” approach to political reporting which directs too much coverage to the costs of net zero debate and gives too much airtime to climate sceptic Tory MPs.