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23rd December 2021

Copia’s summary of COP26

A relaxed read on the issues of the day

As the excitement surrounding COP26, where thousands gathered in Glasgow to discuss an action plan to limit the impact we are having on the environment, has settled, we think it provides an opportune time to reflect on the promises made at the conference. By the end of the conference over 90% of global emissions were covered by net zero commitments. Some see it as a turning point for environmental change whilst others such as Greta Thunberg describe it as a “Global North greenwash festival.”

The key goals of COP26 included securing a net zero status by mid-century, keeping 1.5 degrees of warming within reach, and adapting behaviours in order to protect communities and natural habitats. The discussion around how these goals were going to be financed was core to COP26, with an emphasis on the need for developed countries to step up and take the lead.

The Paris agreement of 2015 outlined the changes that needed to be made to reach the goal of global warming reaching a maximum of 1.5 degrees Celsius. However, standards seem to have slipped from 2015, with a representative from the Urgewald non-profit environmental and human rights organisation, noting that at least 96% of gas and oil producers are looking to expand their assets. With current policies, such as increasing subsidies and investment for fossil fuels, we may be more likely to see warming of 2.7 degrees Celsius. The key to successfully reducing global warming is by accelerating the reduction of fossil fuels, which COP26 focused on. Surprisingly, the Paris agreement didn’t explicitly mention fossil fuels, which may explain the previous failure to limit global warming.

Promisingly, this year’s conference announced that many countries, including major economic areas such as the US, EU, Canada and the UK, have pledged to stop directly supporting the ‘unabated’ fossil fuel sector by year 2022.* This promise marks the first mention of a political commitment to tackle issues with financing of oil and gas as well as coal. The private sector also seems to be supporting the move away from fossil fuels, with 450 financial organisations who collectively control US$130 trillion of investment assets, agreeing to redirect financial support from industries reliant on fossil fuels and support clean energy technology.

Alongside pledges to reduce fossil fuel consumption, world leaders also vowed to stop deforestation by 2030. Encouragingly, the promise was made by governments who represent approximately 85% of global forests. However, the limited ability to monitor this commitment may yet deliver a poor outcome. Many other agreements signed, such as a pledge to reduce global methane by 30% by 2030, excluded some of the largest global emitters such as China, India and Russia. However, the agreement regarding the phasing out of coal proved more promising, with large coal producers such as Vietnam, Chile and Poland deciding to move away from coal.

All in all, the conference was full of large promises and commitments by the world’s leaders, but the real question is how and if these promises will be kept. With the vast majority of promises being hard to enforce, monitor and police, the outcome of COP26 might still be an uncertain future for the global climate.

*Some exceptions exist but only if they follow the 1.5 degrees Celsius warming limit defined in the Paris Agreement.

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    Copia Capital Management is a trading name of Novia Financial Plc. Novia Financial Plc is a limited company registered in England & Wales. Register Number: 06467886. Registered office: Cambridge House, Henry St, Bath, Somerset BA1 1JS. Novia Financial Plc is authorised and regulated by the Financial Conduct Authority. Register Number: 481600.

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