Has COP26 Given us Reason to Be Optimistic?
Just three years ago at COP24 in Katowice, US President Trump dismissed all mention of the IPCC report urging countries to work towards a 1.5°C target. Now, the 1.5°C limit is centre stage, with negotiators showing a new sense of collectivism and understanding of their role in protecting the lives of those already suffering the consequences of climate change.
However, tenions were still high, especially in the final hours of the summit when the Glasgow Climate Pact was rushed through with a last-minute intervention from Indian environment minister Bhupender Yadav, seeing the commitment on coal changed from “phase-out” to “phase-down”. While many left Glasgow deeply disappointed by the change, this is the first time the international community has reached a joint commitment to reduce reliance on fossil fuels. The hope is that this deal will be a clear signal that the era of coal has ended.
Finance underpinned all aspects of the talks. Currently, the rhetoric of many international groups and investors is heavily skewed towards mitigating against climate change through the implementation of renewable energy projects. Meanwhile, supporting adaptation schemes for developing countries, such as flood defenses and air-conditioning infrastructure, has largely been ignored. The Glasgow Climate Pact aims to improve the balance of climate finance by calling on developed nations to at least double their collective provision of finance for adaptation by 2025. Although, this would only equate to $40bn, just half of what is needed to support current adaptation costs.
Many were optimistic that the claims made would translate into a new wave of green finance from the private sector. However, many were equally sceptical. Just before the summit, developed nations had to concede that they failed to meet the $100bn annual climate finance target set over a decade ago. This failure led many developing countries to question the sincerity of advanced economies’ promises to provide finance. Such was highlighted by COP26 finance adviser Mark Carney’s contentious suggestion that $130tn of private capital is committed to achieving net-zero emissions. If true, this figure would equate to around 40 per cent of all financial assets. Carney claimed that while the instruments for raising climate finance were lacking prior to COP26, the establishment of the Glasgow Financial Alliance for Net Zero (Gfanz) has provided all the finance needed for the transition to net-zero. Consisting of over 450 banks, insurers and asset managers globally, Gfanz is pledging $100tn of finance over the next three decades. These initially eye-catching figures have received harsh criticism, with many questioning if these pledges will actually lead to action. Rainforest Action Network has claimed that 93 of the banks included provided $575bn to the fossil fuel industry in 2020.
The controversy surrounding how climate finance is calculated has led many to call for a clear, internationally recognised definition of climate finance. Nonetheless, any attempt to construct a working definition has so far been blocked by developed nations. Despite the controversy, mobilising finance is vital for achieving the 1.5°C target, with the UN forecasting that the private sector has the potential to provide 70 per cent of the total investment needed to meet our targets.
Critically, the success of COP26 depends on if promises translate into action. Speaking to students at The University of Leeds, Alex Sobel MP agreed with Carney’s claims. The capacity is there, but the issue is confidence. While many have criticised governments for not being decisive enough on climate to avoid a crisis, overall, the summit will be judged on whether or not the commitments that were made provide sufficient signals to stimulate green investment.