COP26 Final Document, Non-Papers, and China-US Cooperation
Here are 5 ESG insights you might have missed this week:
1. Updated COP26 Draft Plan Waters Down Key Language On Fossil Fuels And NDCs-
With negotiations scheduled to finish later today (12 November) at COP26, a new draft plan has been unveiled with subtle yet important changes, such as "requesting" that nations submit updated climate plans by the end of 2022, but has watered down facets on fossil fuels.
In what is largely a game of spot the difference between this document and previous daft, which was published on Wednesday, negotiators have made a few important tweaks to the language issued in the document.
The first version also marked a historic moment for COP26 negotiation texts. It called upon nations “to accelerate the phasing out of coal and subsidies for fossil fuels”. In the updated version, the language has been watered down slightly. It now only calls for the phase-out of “unabated” coal power and “inefficient subsidies for fossil fuels”. It comes after nations such as Saudi Arabia lobbied for the reference of fossil fuels to be removed from the documents altogether.
2. COP26 Non-Paper: Presidency Summary of Possible Elements Identified by Parties-
Over the weekend, with early negotiations complete, the summit’s organisers released an outline of what they hope will be achieved by the end of the conference.
This includes rules for an international carbon market, a framework for “loss-and-damage” financing (reparations for the countries already suffering economically from climate change) and a system to check whether countries are living up to their climate goals.
All are issues that several successive COP summits have failed to resolve. Any advances should be celebrated, but expect the final document to embody only slow progress.
3. COP26: China And US Agree To Boost Climate Co-Operation-
In a surprise announcement, the US and China pledged to boost climate co-operation over the next decade.
Steps were agreed on a range of issues, including: methane emissions, the transition to clean energy, and de-carbonisation.
The joint declaration says both sides will "recall their firm commitment to work together" to achieve the 1.5C temperature goal set out in the 2015 Paris Agreement.
As the world's two biggest CO2 emitters, an agreement between the US and China to is seen as critical in keeping the 1.5C temperature rise threshold within reach.
Link to Source: https://www.bbc.com/news/science-environment-59238869
4. 1.9°C: New COP26 Pledges Bring Projected Warming To Below 2°C For The First Time In History-
Climate Resource estimate updates pathway if all pledges (and new pledges) are fulfilled.
"If all NDC and long-term pledges are fulfilled and adequately supported, the best-estimate peak warming this century is 1.9 C. This is still a far stretch from halting warming around 1.5K, but substantially improved over projections from just a few weeks ago."
However, The Economist estimates that new climate commitments, if respected, will put the world on track for temperatures of 2.4°C above pre-industrial levels by 2100.
Link to Source: https://www.climate-resource.com/tools/ndcs
5. The Uses And Abuses Of Green Finance-
Why the net-zero pledges of financial firms won’t save the world.
The reality of green investing falls short of this ideal. The first problem is coverage. The Economist estimates that listed firms which are not state-controlled account for only 14-32% of the world’s emissions. State-controlled companies, such as Coal India or Saudi Aramco, the world’s biggest oil producer, are a big part of the problem and they do not operate under the sway of institutional fund managers and private-sector bankers.
A second issue is measurement. There is as yet no way to accurately assess the carbon footprint of a portfolio without double counting.
The third problem is incentives. Private financial firms aim to maximise risk-adjusted profits for their clients and owners. This is not well-aligned with cutting carbon.
One more thing: A fascinating 11-min TED talk on tracking the world’s carbon emission with satellites and AI.
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