Johnston Carmichael About Us Industry Experience Our Services Insights Careers Contact Brexit Budget 2021 Insights Back to Insights COP26 - a platform for change Mark Stewart Edinburgh Office Head & Corporate Finance Partner 17 NOVEMBER 2021 ENERGY, INFRASTRUCTURE AND SUSTAINABILITY INSIGHTS INFRASTRUCTURE & RENEWABLE ENERGY INSIGHTS Last week, we looked at the key announcements made in week one of COP26, the 26th UN Climate Change Conference of the Parties, and below I summarise the key outcomes from week two. Key themes included addressing a pledge to phase down coal; pledges to cut emissions from transport such as vehicles; aviation and shipping; and a historic collaboration signed between the US and China. Glasgow was a great host and I think this year’s summit will be remembered as the COP of change – the COP where the issues at play were brought out of the bubble and into wider public consciousness. Progress has been made, but we know now that there is a rolling programme of improvements required. If all the COP26 pledges are made good, the projected level of GHG emissions in 2030 will still be significantly above the level required. Best estimates by scientists are that the combined pledges in Glasgow put us on a 2.4°C temperature rise trajectory, well above the Paris Agreement target of 1.5°C, and at a level which puts the planet in harm’s way – so there is no doubt that more work is still to be done. The key announcements in week two included: Glasgow Climate Pact The formation of the Glasgow Climate Pact on 13 November signalled the end of COP26, a day after the conference was originally due to close. The Pact, signed by all attendees, is the first climate deal to explicitly plan to phase down coal, which is responsible for the highest carbon emissions of all the fossil fuels, producing approximately 40% of annual CO2 emissions. Despite coal reduction therefore being critical to keeping global warming under the 1.5°C target, opposition from China, India and Saudi Arabia meant that the pact agreed to phase down coal usage rather than phase out. The Glasgow Climate Pact deal also pushes for more urgent emission cuts and pledges additional funds for developing countries, to help them adapt to climate impacts. We summarise the key outcomes from week two of COP26, where key themes included addressing a pledge to phase down coal; pledges to cut emissions from transport such as vehicles; aviation and shipping; and a historic collaboration signed between the US and China. SHARE THIS ON: Collaboration agreement signed by the US and China The US and China revealed a historic joint commitment to tackling climate change on 10 November. The two nations, which are the world’s biggest greenhouse gas emitters, signed a declaration to assemble a joint working group, which will meet regularly to discuss and set actions on issues such as low-carbon energy, methane emissions and deforestation. The first meeting is scheduled for early 2022. The group intends to develop long-term plans for achieving net zero, which will include definitive actions to be taken by 2030. Aviation emissions targets Around 3% of global annual emissions can be attributed to aviation, and its popularity is unlikely to decline. Eighteen nations, which collectively account for over 40% of global annual aviation emissions, signed a new declaration which commits them to jointly developing aviation emissions targets which align with the Paris Agreement’s 1.5C temperature pathway. These are to be pre-2050, and developed in line with the goal of global net-zero by 2050. The approach will focus on utilising technology to find a solution to the aviation emissions rather than capping growth of the sector, and the targets will set out which technologies should be used for decarbonisation. Zero-emission vehicles Following on from the UK Government’s Transport Decarbonisation Plan released earlier this year, which plans to ban new petrol and diesel car sales by 2030 and new petrol and diesel heavy goods vehicle (HGV) sales by 2040, the UK is leading on a new global declaration to end ICE (internal combustion engine) vehicle sales. Signed by over 30 countries and a significant number of businesses – both vehicle manufacturers and fleet operators - the declaration states that all new vehicles sold in leading markets should be zero-emission by 2035, and by 2040 for other markets. Notably, the US, China and Germany - the world’s three largest car markets - have not signed the declaration as yet, although businesses, cities and regions in these countries have. Net-zero shipping corridors Several nations, including the UK, US, Canada, Australia and Norway, signed a new ‘Clydebank Declaration’ which has been launched to establish ‘green shipping corridors’; zero-emission routes between ports. It is expected that a combination of technologies will be required to achieve low-carbon shipping, and these green corridors will be used to test emerging technologies. The goal is to develop a minimum of six corridors, which are expected to be relatively short routes, by the middle of the decade, and to have added significantly more, including long-haul routes, by 2030. Launch of the ‘Beyond Oil & Gas Alliance’ On 11 November, Denmark and Costa Rica launched the ‘Beyond Oil & Gas Alliance’, which is intended to phase out oil & gas production. Nations will be required to confirm an end date for new oil and gas licensing, and their plans to phase out existing capacity. Nations committed to the Alliance include Ireland, Wales, France, Sweden, New Zealand, California and Quebec. In terms of credibility, many critics have asked why the world’s largest producers, such as the UK, US, Canada, Norway, Saudi Arabia and Russia, have not joined. Cleantech ‘missions’ commitment A group of 23 governments, including the UK, US, EU, China and India, unveiled new plans to accelerate the development of cleantech, under the ‘Mission Innovation’ platform originally launched at COP21. Collectively, the 23 nations involved represent 90% of the global public investment in low-carbon energy innovations made last year. In addition to the existing plans for decarbonising power systems and shipping, new workstreams were announced for scaling up renewable fuels, decarbonising the chemicals sector and producing renewable materials, low-carbon cities, decarbonising heavy industrial sectors, and scaling up man-made carbon capture technologies. A first step We all have our role to play in the climate emergency. It can’t be for governments, private sector business or individuals to act in isolation; everyone must play their part. When Greta Thunberg gets home and reflects on the last few weeks, she will hopefully agree that what has taken place in Glasgow over the last few weeks cannot be described as “Blah, blah, blah”. Yes, the rhetoric still needs to be turned into reality, but Glasgow has set the platform – it’s the start of the journey. Get in touch To discuss COP26 or how we can help support your business in any aspect of the net zero agenda, please get in touch with me at mark.stewart@jcca.co.uk or another member of our Energy, Infrastructure & Sustainability team. Mark Stewart Edinburgh Office Head & Corporate Finance Partner 08 NOVEMBER 2021ENERGY, INFRASTRUCTURE AND SUSTAINABILITYCORPORATE FINANCE COP26 - moving from rhetoric to reality It’s half-time in the two-week push to galvanise the world’s leaders into keeping the 1.5°C global warming ambition set out in the Paris Agreement alive, with negotiations at COP26 set to continue today following a rest day on Sunday. Back to top Get in touch © 2021 Johnston Carmichael An independent member of PKF International Limited. Using our site Our Privacy Notice Terms and conditions Disclaimer Modern Slavery Statement Details about cookies Accessibility Sitemap Client portal Transparency Report Regulatory information and complaints Gender Pay Gap Reporting Follow us Arrange a chat Phone number City or Town Reason for meeting Personal Finance Business Next page Have a general enquiry? Get in touch. 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