On the homestretch of COP26, the overarching question at COP26 remains: what steps nations will agree to take to limit global warming to +1.5°C above pre-industrial levels, the temperature increase that scientists agree would avoid the worst effects of climate change?
- The COP26 talks have entered their final hours with much unresolved.
- The net zero transition in emerging markets (EMs) remains crucial to the global effort.
- Mobilising finance for the transition to net zero will require commitment from public and private sources.
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Limiting warming to +1.5°C will require deep cuts to global CO2 emissions. Keeping the climate goal within reach requires that nations find a way to reduce the emissions intensity of economic activity in such a way that global emissions fall even as the world economy continues to grow.
This is not impossible and might not even be as expensive as commonly perceived.
The debate has shifted from making emissions more expensive (via taxation or regulation) to making green technology cheaper.
Identifying the most promising new green technologies and figuring out how to bring down their costs even faster, and to deploy them at scale, will be among the topics discussed in the session focused on science and innovation.
So what is the catch? Political action remains slow and the scale and length of the summit is testament to its complexity.
Have China and the U.S. made progress on climate change?
China – the world’s largest CO2 emitter — is central to the global effort to decarbonise, but its current situation is mixed.
It is the world’s largest producer of renewable energy; it exports more solar than any other country; and it has the largest fleet of electric vehicles.
On the other hand, it also consumes the most coal, is the world’s biggest importer of oil and produces around one-third of the world’s CO2 emissions.
China did recently promise to stop financing coal-fired power plants overseas; following that up with a pledge to stop building coal-fired power plants at home would be a success.
The U.S. – the second-largest emitter – has been an unreliable partner, flopping back and forth on signing the Paris Agreement under the Trump and Biden administrations.
Now back on board, the Biden administration has set ambitious targets and wants others to up their climate game, but these pleas are likely to fall on deaf ears unless the White House is able to point to new domestic climate legislation.
The challenges facing emerging markets
Since it is by no means guaranteed that even wealthy countries can achieve net zero carbon, with their greater technology and financial resources, the challenge for emerging markets is huge.
Large emerging markets such as India – which last week pledged to hit net zero by 2070 – will need to increase the efficiency of economic activity from low levels of economic development, meaning that they will need to leapfrog certain technologies. This is not impossible, given the fall in price of onshore wind and solar.
The falling cost of green solutions is a relentlessly hammered home at COP26; and emerging markets like India, Indonesia and South Africa will be asked to set more ambitious emission-reduction targets and to embrace renewable energy in a bigger way.
Emerging markets will need and ask for more technological and financial assistance to help them achieve this.
How to deal with legacy assets and manage the transition in low-income countries that are heavily dependent on exporting fossil fuels, such as Algeria and Nigeria, will also be an important topic.
What else is on the remaining COP26 agenda?
One unresolved element sure to capture the headlines is the as-yet unfulfilled pledge by wealthy countries to finance the net zero transition in emerging economies at a rate of $100 billion per year.
According to the OECD, in not one of the 11 years since this pledge was made has this been met. Not only is such financing badly needed in, but it would also create good faith in the broader negotiations, encouraging emerging markets to set more ambitious targets.
Mobilising finance at scale is going to be key in both advanced economies and emerging markets. Huge amounts of capital expenditure will be needed on infrastructure to make the transition.
Huge pools of private capital are looking for a sustainable investment home, but targeted spending by the public sector will be needed, with the potential to unlock large quantities of private capital. Identifying such instances will be an important part of the COP26 session.
The energy and transportation sessions are expected to discuss technological changes, focusing on such practical issues as grid connectivity and storage infrastructure in the case of energy, and charging infrastructure for electric vehicles in the case of transportation.
The organisers of COP26 have set the target of securing net zero by 2050 and keeping a 1.5°C rise by the end of the century within reach.
The case for more climate ambition
Achieving tangible steps towards this target appears unlikely. But a positive economic and business case for more climate ambition has never been stronger, with the cost of green solutions continuing to fall.
The conversation will not end with COP26, even if it has been labelled as a ‘last-chance saloon’.