What does COP 26 mean for the global green transition?

Expectations for COP 26 have been running high. It is meant to be the conference which translates general net zero agreements into a set of plans and targets.

| 6 min read

The President of the EU Commission could not be clearer. In her State of the Union address last month she said global warming is “the gravest planetary crisis of all time”. She urged greater efforts and more investment for Europe under the umbrella of the Green Deal. John Kerry, the US President’s Climate Ambassador, tells us “Time is running out”. The US Administration thinks the challenge is existential. Brazil’s President does not see it like that and has had several lively exchanges with the green lobby as he has presided over a substantial reduction to the rain forest. The Prime Minister of Australia may be too busy to come to COP26 himself. China is talking up a very modest pledge to try to stop the growth in its carbon dioxide output by 2030, giving plenty of room to carry on increasing its large output this decade. The blackouts caused by emissions targets have led directly to the Chinese government suspending targets and ordering more coal to be mined and burned at home to put the lights back on.

Expectations for COP 26 have been running high. It is meant to be the conference which translates general agreement that countries wish to be net zero by 2050 into a set of plans and targets for the next few years that get them well on the way to the 2050 objective this decade. Yet China, by far the world’s largest producer of CO2, has only pledged to stop increasing it by 2030 and to be net zero by 2060. The green movement is increasingly restless for more action. Most governments see the upside of more green jobs on the back of massive investment programmes in replacements for fossil fuels and relish announcing the positives. There are a few climate change sceptic leaders around the world who alternate between antagonising the green lobbies, and quietly doing as little as possible that might be harmful to the fossil fuel based economy as it currently exists. There are others who are probably relieved that 2050 is still a long way off and there are no sanctions or penalties for failing to hit intermediate targets which they know are going to be stretching. A programme that lasts for 30 years is way beyond the time horizons of all elected leaders. Nor does it bind the autocrats who think they have enough power to plan for a long period in office.

In Canada this year and in Australia in 2019 the tensions between new jobs and existing jobs have been clear and have led to election debates about the road to net zero. Both countries have depended on the fossil fuel economy for many jobs and incomes. In each case the ‘greener’ main party has failed to break through to win the most votes whilst the Green parties themselves have polled relatively poorly. In the recent German election, the Greens lost 10% from an initial high in opinion polls and ended third on 14.8% when they spelt out more of the details of the taxes and controls they would wish to bring in – and what it meant for everyday lives and budgets. The EU, conscious that there will be downsides as well as upsides, plans a new Social Climate Fund to subsidise people placed into energy poverty by high carbon taxes and alternative energy prices. In the USA the President is keener to talk of the jobs and investment upsides and says less about the need to run down coal, oil and gas.

China, the USA and the EU account for more than half of global carbon dioxide output. The EU and US will produce targets that show a way to net zero by 2050, whilst China accounting for 27% of global carbon claims the right to carry on increasing as it wishes to grow faster. This autumn China is short of coal, still its dominant means of generating electricity. The country is rationing as a result. Europe is short of gas and has suffered from a shortage of wind. This acts as a reminder that security of supply still matters, and weather dependency has its limitations.

So what can we expect from COP 26? More pledges will be made. There will be a further increase in the amount of public money and private investment allocated to green projects. There will be a bigger fund for the rich countries to assist the developing world. There will be more regulations seeking to make fossil fuel use dearer and to phase out everything from diesel cars to gas boilers in due course. There will be more attempts to close the remaining coal power stations. There will be more interest in carbon taxes and carbon border charges.

Behind the scenes, there will be more government recognition that at least for this decade the world will remain very dependent on fossil fuels, and that system needs to carry on working smoothly all the time we await wider adoption of green alternatives. It could be that COP 26 is a background for a bit more balance in valuations between green energy and fossil fuel energy, after a long run up in wind, solar and battery in response to the avalanche of green transition monies flowing through the system. The current background to the conference is very firm fossil fuel prices and a new intensity by some governments about securing enough of them for the next few years of a planned transition.

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What does COP 26 mean for the global green transition?

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