European Union didn’t expect much from COP26: the EU is already ahead of the rest of the world’s regions in climate-change-efforts’ ambitions and actions. However, it is reasonable to have a look at the COP26 outcomes and perspective implementation of the reached agreements. As Scottish writer Robert Louis Stevenson once said: “Don’t judge each day by the harvest you reap, but by the seeds that you plant”.
The COP26 outcomes are both positive and negative; on the positive side are the following factors: climate neutrality has been recognised as a global shared target; for the first time ever the world has an agreed target for 2030 (e.g. a 45% reduction in greenhouse gas emissions, GHG); consensus reached on accelerated actions and on an agreed implementation methodology, i.e. a rulebook to be used for comparisons and control. There are some negative sides too: quite a few clear national commitments (including targets to reach and steps implemented) defined as part of the common global community’s goals; the poor countries are still not receiving enough financial support from the industrialised countries which are the main polluters, etc.
The COP26 participating states (they are called “parties”, hence COP as termed as a “conference of parties”) have made progress in several key areas; parties built a bridge between good intentions and measurable actions to lower emissions, increase resilience and provide much needed finance.
As to the previous COP’s efforts, the lack of trust has burdened global climate negotiations for almost three decades. Developing countries regard climate change as a crisis caused largely by the rich countries, which they also view as shirking their historical and ongoing responsibility for the crisis. Worried that they will be left paying the bills, many key developing countries, such as India, don’t much care to negotiate or strategize. In some states, the Big Oil and Big Coal are still vital forces preventing optimal transformations towards global “green deal”.
In the UN Secretary-General’s statement on the conclusion of the UN Climate Change Conference COP26, he underlined that “it is time to go into emergency mode” in reaching net zero emissions and a zero-use of fossil fuels, as well as end fossil fuels subsidies in the states. To be exact, he noted, it is about phasing out coal, putting price on carbon, build resilience of vulnerable communities against the impacts of climate change, and making $100 billion climate finance commitment to support developing countries.
It is true: one cannot help falling into pessimism looking at about quarter of a century’s global community’s attempts to tackle climate changes’ issues. And two major problems are still there: a) deep diversity in approaches between rich and poor nations, and b) economy and growth that are dominating the national approaches to climate policy; of course there are myriads of smaller problems, but these two are almost irreconcilable…
Some other aspects of COP26 outcomes can be summoned too:
= Energy issues: In May 2020, the International Energy Agency announced that exploitation and development of new oil and gas fields must stop if the world is to stay within safe limits of global heating and meet the goal of net zero emissions by 2050. Efforts in tapping into subsea natural gas resources have grown smaller as the international community turns toward a more climate-friendly energy agenda. There is still a critical dilemma: how can countries resolve the national growth strategies, their geopolitical disputes and set forth a new roadmap for collaborative regional efforts on energy and the environment?
However, COP26 agreed for the first time to accelerate efforts towards the phase-down (not phase out!) of unabated coal power and inefficient fossil fuel subsidies, and recognised the need for financial support towards a just transition in less favorable states.
As the OECD marks the 10th Anniversary of its Green Growth Strategy, this global forum will continue discussing how the states could make use of green recovery measures to “build back better” and also address the climate crisis and other environmental goals.
The OECD noticed that cities are engines of growth and home to more than half of global citizens, which are badly suffering from all sorts of pollution. Present pandemic has also led to rethinking urban design, mobility options and working modes; tourism and transport sectors are also being reassessed as part of green recovery efforts. Thus, there is a need to address the most optimal ways to design cities as well as mobility of people and goods for a greener and more resilient future.
= Financial issues: for the first time the global community has encouraged international financial institutions to consider climate vulnerabilities in concessional financial and other forms of support, including Special Drawing Rights. That means finally delivering on the $100 billion climate finance commitment to developing countries: about one-third of the world’s public climate finance comes from the EU and its member states.
Financing is at the heart of the geopolitical rupture on climate change. Developing countries are already reeling under countless pressures: the COVID-19 pandemic, weak domestic economies, increasingly frequent and severe climate-related disasters, the multiple disruptions of the digital age, US-China tensions, and high borrowing costs on international loans. The less developing states watch in despare when rich countries borrow trillions of dollars on capital markets at near-zero interest rates, while they must pay 5-10%.
Modern recovery can support a green structural reforms agenda and give a priority to governance efforts in designing structural reforms; it also provides insights into the implementation gaps, identifies financial barriers in structural green recovery and gives examples of successful green structural policies. However, the global promise to mobilize about $100 billion per year for climate action in developing countries dates back to COP15 in 2009.
One workable approach is suggested by Jeffrey Sacks: in order to help financing the clean-energy transition (mitigation) and climate resilience (adaptation) in developing countries, each high-income country would be levied $5 per ton of carbon dioxide emitted. Upper-middle-income countries would be levied $2.50 per ton; these CO2 levies would start soon and rise gradually, doubling in five years.
High-income countries currently emit around 12 billion tons of CO2 per year, and upper-middle-income countries are emitting around 16 billion tons annually, so the carbon payments would add up to roughly $100 billion at the start, and double after five years. The funds would be directed to low-income and lower-middle-income countries, as well as to particular countries with special climate vulnerabilities. A rules-based system, with fair and transparent burden sharing, is the way to secure the financing we need for planetary safety and fairness, argued professor Sacks.
= Vital role is devoted to science and research: COP26 acknowledged that the absolute priority must be towards most rapid, deep and sustained emissions reductions in this decade; specifically a 45% cut by 2030 compared to 2010 levels.
For example, science and research are the basic principle of the European Green Deal: i.e. science has shown beyond doubt that GHG such as CO2 and methane, are destroying the climate and peoples’ livelihoods. Consequently, there must be a clear price tag attached to CO2 with the concept of “polluter pay”: those wanting to avoid paying will seek new pathways through innovation and clean technology. On another hand, a “CO2 price” will become the driver of innovation, showing new pathways for public and private investment and for the right framework legislation aimed at resource-efficient, zero-carbon and circular economy.
Thus, emissions trading will be eliminated from existing production sectors, electricity generators and industry, construction and transport. It must be accompanied by a robust social compensation in the EU which is adequate to the European social market economy’s principles.
The COP26’s “rule book” includes the mechanisms setting out a functioning international carbon markets to support further global cooperation on emission reductions (art. 6). However, the EU and the US would want to gang up against China and other states’ extensive use of coals, i.e. coal-fired blast furnaces in a green steel alliance.
There are however high climate-effect mitigation potential for improved rice cultivation in Asia, forest management and enteric fermentation, synthetic fertilizer, and manure in large global economies (China, India, Russia) and in other developed countries and regions (US, Australia, EU), as well as carbon removal (e.g. through afforestation) and reduced land-use change in tropical countries. Taking adequate measures on these points would go a long way towards reaching the 1.5°C goal and also notably help fulfill the SDGs.
Some experts have already described optimistic scenarios in mitigating negative developmental consequences: thus, Goldman Sachs predicted the following five themes that would shape the path towards net-zero:
- National commitments and further cuts to emissions by 2030 are critical to reaching net-zero by 2050.
- Carbon pricing and offset schemes are key instruments for high-cost de-carbonization, which require tighter standards, stronger supervision and better global liquidity.
- Carbon labeling could empower consumers to choose low carbon goods and manage their carbon budgets.
- The rise of “eco-mitigating-capital” would empower financial growth towards de-carbonization; although regulatory uncertainty and a lack of global coordination could generate structural underinvestment in key materials, energy and heavy transport sectors, raising price inflation and affordability concerns.
- A complex ecosystem of low carbon technologies will be needed to reach net-zero; to keep global warming below 1.5°C and reach net-zero by 2050, the world expects a cumulative $56 trillion “green infrastructure” investments.
= Towards green transition in emerging economies: To help lower emissions in many other emerging economies, we need to build coalitions of support including developed countries, financial institutions, those with the technical know-how. This is crucial to help each of those emerging countries speed the transition from coal and accelerate the greening of their economies.
COP26: effect and consequences for EU’s integration
Present short- and long-term priorities are clearly described in the EU’s political guidance: economic recovery, combating climate change, green and digital transitions; as to the climate change efforts on a global scale, the EU will soon create a high-level expert group with the aim of establishing clear standards in measuring and analyzing the zero-effect’s commitments of public, private organisations and state’s governance in reducing pollution and fossil-fuels’ consumption.
The EU-27 combined climate change efforts can shape global markets and open new opportunities in socio-economic development. Among other things, these efforts can strengthen a positive role of the EU’s currency, the euro in the world with a key pillar of the € 800 billion NextGenerationEU recovery program. For the first time, the EU states are raising capital globally on that scale, and drawing heavily on sustainable, i.e. “green bonds”; roughly one third of NextGenerationEU is being funded by these green bonds, which is more than €250 billion.
Besides, the EU’s legislative base in climate-effective measures is already heavily developed aimed at implementing the commitments of the: a) EU “green deal” towards first in the world climate-neutral continent with reducing net GHG emissions by 2050, and economic growth decoupled from resource use. See more in: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en; b) new EU circular economy action plan, adopted in March 2020 aimed at reducing pressure on natural resources and creating sustainable growth and jobs; it is also a prerequisite to achieve the Union’s 2050 climate neutrality target and to halt biodiversity loss. See more in: https://ec.europa.eu/environment/strategy/circular-economy-action-plan_en; and c) zero pollution action plan (adopted in May 2021) aimed at zero pollution vision for 2050 concerning negative effects on air, water and soil pollution to be reduced to non-harmful levels for peoples’ health and stability of natural ecosystems. See: https://ec.europa.eu/environment/strategy/zero-pollution-action-plan_en.
Besides, some EU states are acting fiercely pro-active: e.g. Germany currently has €17 billion in federal green bonds, compared to €250 billion from the EU and NextGenerationEU; thus making the euro as the first choice for sustainable finance. Just a comparative example: about half of all sustainable financial instruments in the world are issued in euro, and only 27 percent in dollars. Moreover, the green bonds are massively oversubscribed when the EU issued them; that means that the EU can further develop that position. Setting a structural agenda for a green economic recovery from COVID-19 is becoming an urgent task for governance. Reference to: https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_21_6041
During last two years the EU has made serious steps aimed at reducing negative effect on climate:
= In December 2019: The European Green Deal sets the goal of making Europe the first climate-neutral continent by 2050; see Commission President’s statement in: https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_21_3701;
= In March 2020: Commission proposes European Climate Law to write 2050 climate neutrality target into binding legislation; more in: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_335
= In June 2021: European Climate Law enters into force;
= In July 2021: A package of proposals adopted to make the EU’s climate, energy, land use, transport and taxation policies fit for reducing net greenhouse gas emissions. All 27 EU Member States committed to turning the EU into the first climate neutral continent by 2050. To get there, they pledged to reduce emissions by at least 55% by 2030, compared to 1990 levels. Besides, the EU states promised to make their climate, energy, land use, transport and taxation policies fit for the necessary reduction of greenhouse gas emissions by 2030. More in: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/delivering-european-green-deal_en
Thus, 2021 has been a most productive year in this sense: in spring 2021, the EU adopted the first European Climate Law with the legal objectives for the member states during 2030-2050; in summer this year, Commission presented a detailed road map on how the states will implement the European Green Deal: sector by sector, industry by industry. The EU’s recovery plan (NextGenerationEU) and the EU long-term budget will make up to €2.1 trillion available in the coming years, of which one third -approximately €700 billion- will go to projects under the European Green Deal.
The new EU proposals will have an impact across entire value chains in sectors such as energy and transport, and construction and renovation, helping create sustainable, local and well-paid jobs in the EU states. E.g. 35 million buildings could be renovated in the states by 2030; about 160,000 additional “green jobs” could be created in the construction sector by 2030. Source: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/delivering-european-green-deal_en
New Union’s Social Climate Fund will support those EU citizens who were most affected by energy prices, or are at risk of energy’s poverty. It will help mitigate the costs for those most exposed to changes and to ensure that the green transition is fair. The Fund will provide € 72.2 billion over 7 years to finance renovation of buildings, access to zero and low emission mobility, or even income support. In addition to homes, public buildings must also be renovated to use more renewable energy, and to be more energy efficient. The Commission proposes to: a) require the states to renovate at least 3% of the total floor area of all public buildings annually; b) set a benchmark of 49% of renewables in buildings by 2030; and c) require the states to increase the use of renewable energy in heating and cooling by +1.1 percentage points each year, until 2030.
At the start of COP26, the EU has set three objectives: a) to reach commitments to cut emissions for keeping the global warming limit of 1.5 degrees Celsius; b) to assemble over $100 billion per year (for 2021-25), for financing developing and vulnerable countries in “green transition, and c) to get an agreement on the Paris rulebook, i.e. on the process to deliver.
The EU is ultimately responsible for only 8 percent of global CO2 emissions; that means, Europe needs the rest of the world to join in a common struggle to achieve the 1.5 degrees Celsius target. The global community, at the same time, needs Europe in order to succeed: some countries lack resources; others don’t have needed technology or the political drive.
For those and other reasons, the EU suggests in future a creation of the Global Gateway partnerships in all parts of the world –in Africa, Asia and Latin America – with partnership efforts in infrastructure projects and connectivity. The EU is going to mobilize sufficient resources to make Global Gateway a powerful instrument both for Europe and the rest of the world as the task is urgent and will attract attention from all sides, providing a fair exchange of knowledge, services and goods.
In the conclusion I would like to remind the readers that humanity has entered a new era in which the climate crisis, and what it will mean for future generations, is finally receiving the global attention it needs; in Europe it has been a while ago. But the national governance has also entered a period in which policymakers will need to do more to ensure that the benefits of the modern version of “capitalism” are more evenly shared in a society; it means sparing developing economies – and lower-income people everywhere – from the turmoil fueled by shocks to global energy prices. Failing that, rich countries’ lofty net-zero commitments, although made with the best of intentions, would still be “much ado about nothing”.