Climate Negotiations

COP26 and Proven Failures

It has been a long time since the end of the 26th Conference of the Parties (COP26) of the United Nations Framework Convention on Climate Change (UNFCCC). During this time, many reviews were written. Many valuable sources share what is included in the decisions, including so-called the Glasgow Climate Pact and other decisions. In this blog, I will publish a review on finance and the completed Rulebook sections in the coming days but the general theme of this post will be to read between the lines of the COP session within a broad perspective. The sessions, which were the turning points in the climate change negotiations and followed closely by the public, have always turned into political showrooms beyond technical negotiations. For this reason, it would be useful to evaluate the decisions not only as the ones taken within the scope of the climate change regime but also with the impacts they will have on political and economic manners. With this mindset, I will try to reach some evaluations about the decisions taken and the results of COP26.

Looking for the Next Savior: Private Sector

Before all else, I would recommend for those who haven’t read it to take a look at the article I wrote about what happened in the first week of COP26 and what came to the fore. In this COP session, where the private sector came to the fore the most, the fossil fuel industry had the highest attendance. It is possible to read this statistics in several different ways. Firstly, the fossil fuel industry has come to terms with the reality of climate change and is seeking both financial and political support to take action. Undoubtedly, this is not an easy process, it comes with many serious expenses and paradigm shifts such as long duration for the return of the investments made in renewable energy sources, the complexity of abandoning the established facilities or redesigning their functioning in an environmentally friendly way, the need to invest in technological innovation, and training the workforce to create employment opportunities. For this reason, it is also possible to infer that the fossil fuel industry has lobbied for a gradual transition from fossil fuels to renewable energy in this COP session, even though it seems intent on taking steps on climate change.

Photograph: Dean Calma, IAEA

In the session, besides the official negotiations, initiatives that the UK Presidency attaches great importance drew attention. In these initiatives, the private sector and governments jointly made ambitious commitments. It would not be wrong to say that the private sector was tried to be brought to the forefront in the fight against climate change at COP26, where initiatives such as protecting forests, abandoning international fossil fuel projects, reducing methane use, and promoting electric vehicles came to the fore. In particular, the report, which was announced just before COP26 and stated that the annual climate finance target of 100 billion dollars to be made by developed countries to developing countries by 2020 is not expected to be met and this can be achieved in 2023 with a delay, the private sector should also put its hand in its pocket regarding climate finance. With the UNEP’s Emission Gap Report, it was emphasized that the private sector should also urgently support the action. It is possible to interpret the British Presidency’s emphasis on the private sector as a very successful strategy in case of failure in the negotiations.

Developing Countries Are Now More Wary in Climate Finance

When I came to the negotiations, two of the most important issues on the table were climate finance target for the period after 2025 and the large financial gap between adaptation and mitigation flows. Another development that guided the climate finance negotiations was that COP26 President Alok Sharma shared with the public the report, which revealed that developed countries failed to reach their annual target of 100 billion dollars, just before the start of negotiations with a strategic move. As a result, the failure of developed countries was expressed as “notes with deep regret” in the COP decision. This “proven failure” of developed countries has strengthened the hand of developing countries that insist on extending the title of “long-term finance”, which is supposed to work only on climate finance flows until 2020. This bond of trust that broke between developed and developing countries brought the issue of “long-term finance” to be extended until 2027. Thus, we can say that the finance commitments of developed countries will be kept under the microscope. From another point of view, it would not be wrong to say that in this session, decisions that form the fundamentals for climate finance donors to be placed in a more accountable system were taken. Because developing countries are not in a position to tolerate another unsuccessful attempt of financial support.

Photograph: Justin Goff, UK Government

In the decisions, it was also stated that the adaptation finance would be doubled and that there was no numerical sharing regarding what the climate finance flows will be after 2025, but that work will begin next year. The fact that a concrete commitment was made on adaptation investments stood out as one of the pleasing developments we can count in the negotiations. At this point, I can say that the proven failure of developed countries and making this one of the most important items on the agenda played a role. Therefore, developed countries tried to overcome their failure by taking a concrete step towards adaptation. On the other hand, as far as we have been following the agenda for a while, African countries have made numerous statements that the target of 100 billion dollars is insufficient and that it is needed at least ten times more. In addition, the 130 trillion dollars climate finance flow initiative so-called the Glasgow Financial Alliance for Net Zero (GFANZ) led by the UN Special Envoy for Climate Action and Finance Mark Carney and backed by the private sector was another development that made a great impression. Although it is criticized by many as being unrealistic, if the initiative reveals a plan to eliminate these prejudices, the climate finance commitments after 2025 and the shape of the global climate finance architecture may change. Therefore, I think it would be beneficial for us to follow this initiative closely and looking for the reactions coming from developing countries.

Blaming the Coal

The issue that came to the fore in the Glasgow Climate Pact, which was formed as a result of the negotiations, and which continued until the last minute, was the exclusion of fossil fuel subsidies and the gradual exclusion or reduction of undiminished coal, which we are familiar with from the G7 and G20 Leaders’ Statements. When we looked at the text of the pact, we saw for the first time (and finally) that fossil fuels were mentioned in a COP decision. It can be described as progress. Likewise, while policies for unreduced coal investments have recently been included in the G7, G20, and finally in the decision text,I can say that a serious paradigm shift has been seen for at least coal, if not for all fossil fuels. We can predict that coal, which cannot be used for accessing financial resources, whose international investments are not encouraged, and which gradually loses its cost-effectiveness, especially against solar energy, will come out of energy mixes at the end of this decade.

On the other hand, evaluating this issue only with the final decision makes us miss some sensitive points. Let us remind you that as the negotiations continue, India’s demand that all fossil fuels should be phased-out, especially by developed countries, and that the developing countries should be allowed to use their remaining carbon budget to continue their development processes has not been met. As a country in poverty and in need of cheap resources to meet its energy demand, India may have wanted to create a political message for its own country with this initiative. But more importantly, developed countries could not show the same attitude towards coal, oil, or natural gas. It may come to mind that developed countries take an optimistic approach in this regard and think that it will not be possible to exclude oil and natural gas yet, due to the insufficient progress in technology. But hearing this from the leading countries that are not a party to the initiative to popularize electric vehicles which is one of the big steps taken on the margin of COP26, is confusing. The message coming from developed countries are not crystal clear to phase out fossil fuels, because this initiative is a very crucial step to phase out most subsidized fossil fuel which is oil from roads.

Photograph: Karwai Tang, UK Government

Moreover, developed countries must provide climate finance investments based on renewable energy resources for countries such as India that have difficulties in meeting their energy demand, for these countries to transform their energy mix. However, in such a conjuncture where climate finance is insufficient, different incentive mechanisms should be put into use to force developing countries to give up their relatively feasible and cheap resources such as coal. In addition to these, when we consider the debt crisis caused by the pandemic in developing countries, we are faced with the conclusion that these countries need serious support to establish their development processes within the framework of environmental policies. Otherwise, these countries will not be able to achieve the sustainable development goals and the goals of the Paris Agreement at the same time.

At this point, it would be useful to go back a few weeks and mention the Green Climate Fund’s board meeting, which made a great impression. At the meeting held in October, the Development Bank of Southern Africa could not get accreditation for the next investment period, as developed countries did not give positive votes. As a reason for this, developed countries showed that the development bank had not determined a policy of not supporting fossil fuel-based investments. Developing countries, on the other hand, argued that this was not an obligation, that there was no rule in this direction, so the decision not to allow accreditation was purely political. In this respect, it is difficult to understand why all fossil fuels cannot be excluded, in other words why the proposal that India made during the negotiations was not accepted by the developed countries.

At Least We Have a Functioning Paris Agreement Now

COP26 also went down in history as the place where the endless discussions within the scope of Rulebook for the Article 6 of the Paris Agreement, which regulates market mechanisms, were concluded. Thus, the Paris Agreement became functional 6 years after its adoption and 5 years after its entry into force. I will not mention it for now, as I will cover the effects of COP26 decisions on market mechanisms in another article in detail. However, in the article in which I shared my expectations within the scope of COP26 and Article 6, I stated that there are too many controversial issues regarding the relevant article, so it cannot be concluded in Glasgow. Besides, I expected the Presidency of the United Kingdom to make serious progress with the intense diplomacy it will make with the support of the United States. As of this point, I can say that the COP26 presidency has done an incredible job and has tried to do the least possible damage to its success by accepting the demands of India. It is worth noting that developing countries get what they want in the transition process, which is one of the most controversial issues in the Rulebook, as one of the concessions made by developed countries.

Promising But Not That Much

In conclusion, in this brief evaluation, it could be said that all countries left somehow satisfied (or not for many observers) in the COP26 session. On the other hand, it is difficult to say that the necessary decisions have been taken to reach the 1.5°C target indicated by the Paris Agreement. Despite all these drawbacks, the most important and significant initiatives we have witnessed since the Paris Agreement, concerning fossil fuels and coal, commitment to double the adaptation investments, including the private sector in the fight against climate change, forestry, electric vehicles, and reduction of methane. We have left behind the COP session that will have the most impact. Even if we leave all the decisions aside, it is now possible to talk about a Paris Agreement that has become fully functional now.

However, there is no sanction for not complying with the Paris Agreement and the decisions taken within the scope of the Agreement, therefore it is a relatively comfortable climate regime. Therefore, it is clear that if the commitments made are not embraced by the countries, no progress will be made in the climate crisis. As can be seen from the reading between the lines, it is an undeniable fact that the decisions taken will guide the policies in the coming years.

As we leave the negotiating table, we will now turn our eyes to net-zero emissions targets that will be announced with new and updated national contributions (NDCs). It is indispensable for countries to show their sincerity about the climate crisis, to be transparent and willing to fight against climate change.

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Carbon Pricing and Climate Finance Expert | R and Python Enthusiast | linkedin.com/in/ardauludag

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Arda Uludag

Arda Uludag

Carbon Pricing and Climate Finance Expert | R and Python Enthusiast | linkedin.com/in/ardauludag

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