Dancing on the brink of climate disaster

How do we evaluate the results of Glasgow COP26? It can be reasonably concluded that it is both a victory and a disaster—victory because some significant steps have been taken, and disasters because they are far from the required level. Whether our divided world can muster the courage to meet this challenge before the damage becomes uncontrollable is still very questionable.

Climate Action Tracker A useful summary of where we are: According to current policies and actions, the world temperature will rise by 2.7 degrees Celsius from pre-industrial levels; in terms of the 2030 target alone, this will drop to 2.4C; fully implement all submissions The effective and binding targets will achieve 2.1C; finally, the implementation of all announced targets will achieve 1.8C. Therefore, if the world has achieved everything, it now shows that we will be close to the recommended ceiling of 1.5C. (See chart.)

The suspicion is totally justified. According to the Climate Action Tracker, only the European Union, the United Kingdom, Chile and Costa Rica have set fully designed net zero targets. The improvement of the Nationally Determined Contribution (NDC) announced since September 2020 will reduce the gap in greenhouse gas emissions reduction required by 2030 by only 15-17%. More than half of the reduction in nationally determined contributions came from the United States. To put it mildly, the future policy of the United States is uncertain. New sectoral initiatives will reduce greenhouse gas emissions reductions in 2020 by 24-25% by 2030.Announced the reduction of methane emissions and Deforestation will be Especially important if delivered. But the reduction in deforestation is questionable. In any case, the gap is still large.

However, the situation is not completely bleak. The net zero commitment now covers 80% of total emissionsThe upper limit of 1.5C is also a clear consensus.Another good signal is The joint statement between China and the United States, because without these two countries, nothing can be done. The final declaration also included a pledge to “accelerate the gradual reduction of unabated coal power and inefficient fossil fuel subsidies.” This is too little.But this is the first time In the climate agreement.

The graph shows that despite the new commitments, the gap between planned and required emission reductions is still large

However, if the world is to make Recommended emission reductions by 2030, There is more to happen. One possibility is to make a new commitment at the follow-up COP, which will be held in Egypt next year. This is the first in a series of annual high-level meetings, when countries will be asked to improve their commitments.

Another possibility is a more active private sector. In this regard, the main news is the Glasgow Net Zero Financial Alliance (GFANZ).according to Mark CarneyFormer governor of the Bank of England, his goal is to “establish a financial system in which every decision takes into account climate change.”

GFANZ is composed of the world’s leading asset management companies and banks, with total assets under management of US$130 trillion. In principle, allocating these resources to the net-zero target would make a huge difference. However, Carney pointed out that US$100 trillion is “the minimum amount of external financing required for sustainable energy development in the next three decades”. This is daunting.

The chart shows that sectoral initiatives should make a useful contribution to reducing emissions

Needless to say, although companies can be prevented from doing profitable things, after adjusting for risks, it is impossible to let them do what they think is profitable. If they are to invest on the necessary scale, there must be carbon pricing, elimination of subsidies for fossil fuels, a ban on internal combustion engines, and mandatory climate-related financial disclosures. However, in addition to China, there must be some way to allow a large amount of private investment to enter the climate transition of emerging and developing countries.

GFANZ Call for the establishment of a “national platform” to convene and coordinate “stakeholders-including national and international governments, enterprises, non-governmental organizations, civil society organizations, donors and other development participants -“. .. Agreed and coordinated priorities”. A big and controversial issue will be risk sharing. The public sector should not bear all the risks of the energy transition, and the private sector should not bear all the returns of the energy transition.

The failure of developed countries to provide emerging and developing countries with a financing commitment of US$100 billion per year has attracted much attention. This has iconic meaning.But as According to Amar Bhattacharya and Nicholas Stern of the London School of Economics, This is a small change: “In general, emerging markets and developing countries will require an additional investment of approximately US$0.8 trillion per year by 2025, and an annual investment of approximately US$2 trillion by 2030” for mitigation And adapt to climate change and restore natural capital. About half of them must come from abroad, mainly from private sources.

The graph shows that the U.S. policy shift explains more than half of the planned emissions reduction since September 2020

However, the official sector must also do more. Under such circumstances, it is regrettable that the recent issuance of special drawing rights has not received greater benefits. Of the total appropriation of US$650 billion, About 60% will go to high-income countries that don’t need it, and only 3% go to low-income countries. Plan to transfer 100 billion U.S. dollars of it from high-income countries to developing countries. This should be more to help meet Covid’s legacy and climate challenges.

All in all, if we compare today’s global discussions with those ten years ago, we have come a long way. But if we compare it to where we need to go, there is still a long way to go. It is too early to give up hope. But complacency is absurd. We need to take strong, credible, and swift action, and in particular, we must agree to do so together. The task is great, it’s late. We can’t wait any longer.

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