COP26 - Key things you need to know

Thursday 18th November 2021

The 26th Conference of the Parties (COP26) has finally wrapped up with a new global commitment known as the Glasgow Climate Pact.

Whilst not everyone will be happy with what has been agreed it is fair to say that, despite accusations of watering down commitments and a lack of legal frameworks to enforce action, there is at least a consensus upon which to build.

The Paris Agreement of 2015 stated that countries would work together to limit global warming to ‘well below 2 degrees’ with a stretch target of 1.5C.

COP26 was a major milestone towards this goal and the stated objectives of the conference was therefore to:

1. Secure global net zero by 2050 and keep 1.5C within reach by:

  • accelerating the phase-out of coal
  • curtailing deforestation
  • speeding up the switch to electric vehicles
  • encouraging investment in renewables

 2. Help countries protect communities and natural habitats by:

  • protecting and restoring ecosystems
  • building defences, warning systems and resilient infrastructure and agriculture to avoid loss of homes, livelihoods and lives

3. For developed countries to mobilise at least $100bn in climate finance per year and for international finance institutions to work towards unleashing trillions in private and public sector finance.

4. Work together to finalise the Paris Rulebook (the detailed rules that make the Paris Agreement operational) and to accelerate action to tackle the climate crisis

Was COP26 Successful?

It is now clear that on a global scale the 1.5C target is extremely challenging but it is not yet beyond reach.

The Paris Rulebook has been finalised and the near 200 countries involved have agreed to a transparency process which ‘holds them to account’ for delivering against their targets.

That said, current pledges are only likely to limit global warming to around 2.4C and so much more is required.

However, there is an agreement that individual countries will revisit their commitments by the end of 2022 to ensure they are on track and to strengthen these targets, where necessary, in the run up to 2030.

Key to this is the financial support required by developing countries and the agreement commits developed countries to doubling their collective share and to reach the $100 billion goal as soon as it is possible to do so.

This is of course a missed target, but there is now the prospect of a trillion dollar a year fund from 2025.

The Headline Pledges

It’s important to note that not all countries have signed up to each pledge. However, the key commitments include:

  • Meeting during 2022 with the goal of pledging further cuts to emissions
  • Ending the sale of new cars that produce emissions in leading markets by 2035 and globally by 2040
  • Accelerating efforts towards the phase-down of unabated coal
  • Phasing out subsidies that artificially lower the price of fossil fuels
  • Providing financial backing for clean technologies such as renewable energy
  • Significantly increasing levels of financial support for developing countries
  • Halting and reversing forest loss and land degradation by 2030
  • Reducing human-caused methane emissions by 30% between 2020 and 2030
  • Increasing cooperation between USA and China on emissions and clean energy

A Time For Action

One of the major criticisms levelled at COP26 was that it would end up as little more than a talking shop and that, with time running out, significant action is now required to avert a climate disaster.

Whilst it’s true that some targets have already been missed and future pledges are yet to be made good, progress is being made. And, whilst governments across the world are attempting to create the fiscal and legislative framework for a net-zero global economy to take shape, the private sector also needs to take decisive action.

Transport produces 27% of the UK’s total emissions, which is the equivalent of 122 million metric tons of carbon dioxide. The vast majority of these emissions (91%) comes from road vehicles. This means that the UK will only be able to play its part in limiting global warming to 1.5C if we transition to net-zero road transportation at the earliest opportunity.

The government’s greenprint was recently produced to ensure that all parties are aware of the key milestones on the road to a decarbonised Britain and it’s now clear that there will never be a better time to start switching.

Whether it is grants to fund charging stations at homes, offices and depots, nominal rates of Benefit in Kind (BIK) taxation, or exemptions from VED, congestion charges and Clean Air Zones, the number and size of these incentives are about as good as it’s ever going to get. In fact, the more that people switch, the more likely it is that government will start to reduce, or even remove, some of these incentives. Afterall, there is little point incentivising action that will be taken anyway. In other words, we will reach a tipping point which means that the hole in the Treasury finances caused by mass adoption of electric vehicles will need to be filled.

The complete ban on the sale of new petrol and diesel only cars and vans from 2030 means that no new ICE vehicles will be available in less than 2 typical renewal cycles. Given the current global shortage of vehicles which has arisen from recent events such as COVID-19, along with the planned winddown of traditionally fuelled models by most major manufacturers, it is important to start switching as soon as it is financially and practically viable to do so.

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