After two weeks of back-and-forth negotiations between developed and developing country parties, the COP has ended with a few important hits, but also many misses
The gavel was slammed one final time on Saturday evening at the COP26 climate conference in Glasgow with the last minute Glasgow Pact rushed through after several rounds of iterations. The verdict across the room at the closing plenary—imperfect, uncomfortable, disappointing, imbalanced, but still some progress in the spirit of compromise conveyed the gap between action that is needed and tall statements of progressive action that were made. The assurances though have come to little, as the Presidency and national delegations continue to fight it out over key elements of the implementation of the Paris Agreement.
The Paris Agreement, signed almost six years ago now, set out overarching goals of limiting global warming to well below 2°C, and ideally under 1.5°C. How this would be done was to be decided in subsequent years through the formalisation of the “rule book” in time for the agreement to be operationalised by 2020. This was the biggest burden to be resolved at COP26. Two major issues remained for the completion of the rule book at the end of COP25 in Madrid, namely Article 6 (on market and non-market approaches to emissions reductions) and finance (particularly the transparency frameworks required for the monitoring and verification of finance flows).
After hitting roadblocks in successive sessions since 2016, the rule book has finally been completed, effectively keeping a faint flicker of hope alive to limit warming under 1.5°C. Recognition of phasing down coal and ending fossil fuel subsidies is a first ever mention of fossil fuels in any COP decision text. It, however, revealed the lack of equity, and the blame game and divide that exists between the developed and developing countries and is at play during the negotiations, which are pitched as a matter of life and death.
With climate diplomacy more visible than climate action, hosts UK had their back against the wall right from the get go, as the conference contended with a widening deficit of trust from years of unkept financial promises to developing countries and brewing geopolitical tensions made worse by a burgeoning energy crisis in several parts of the world. Ultimately, the rule book now shows semblance of completion, paving the way for the implementation of the Paris Agreement.
Perhaps sensing ominous signs all around, the UK Presidency scrambled to manage headlines as soon as the conference opened. Starting off with the Leaders Summit, and boasting of several high-profile deals and announcements, including securing net-zero announcements from large developing countries India and Brazil. What ensued was a rush to declare the COP a success even before negotiations around tricky texts began. It didn’t take long for the façade to fall apart though, and within days it was clear that any celebration of progress in the climate agenda was premature. To make matters worse, the COP, already contentious for being organised at a time when the world struggles to emerge from the COVID-19 pandemic, came under heavy fire from observer groups for the event’s poor organisation and accessibility issues.
After two weeks of back-and-forth negotiations between developed and developing country parties, the COP has ended with a few important hits, but also many misses. Through this time, the imprints of disaffection with the paucity of finance and unkept promises on the part of developed countries transformed into deep fault lines that threaten to severely undermine confidence in the collaborative process that drives global climate action. The feeling across developing and vulnerable countries was encapsulated in the Indian environment minister’s remarks hours before the meeting was closed. He stated that none of the urgency that is professed about mitigation is reflected in the delivery of finance. The developing world this year has vociferously demanded stronger commitments on finance as faster mitigation is only possible when there will be real world support, solidarity, responsibility, and most of all, finances. This balance, unfortunately, was not reflected as the talks drew to a close.
At the end of its 26th session, the biggest positives have been a rapidly growing recognition of climate-related Loss and Damage requiring specific and focused attention, and finally bringing some closure to the long pending chapter on Article 6. On the other hand, differences over finance and attempts to undermine principles of equity and historic responsibilities threaten to jeopardise any chance of limiting warming to 1.5 degrees.
Mitigation: Despite being the area with most progress over years of negotiations, the gap between emission reductions and requirements continues to startle (and grow wider). While the world needs carbon emissions to come down by around 45% over the next decade compared to 2010 levels to limit warming to 1.5°C, current projections show emissions will actually increase by 13.7%. A key decision at the COP will see the establishment of a work programme to “urgently scale up mitigation ambition and implementation”. A new annual high-level ministerial round table on pre-2030 ambition and mitigation will also be kicked off next year to make further progress on the issue.
Drama ensued in the final hours of the conference as India led the charge to propose new language surrounding low carbon transitions, particularly on coal. Practically at the final bell of the overtime session, US, EU, India and China worked out a convenient compromise that won’t seek ambition from the developed world and China, and allow US, EU and China to continue fossil fuel use and give away subsidies whilst also letting India recognise its domestic circumstance as it phases down the use of coal. A lowest common denominator, the final decision will reflect agreement of parties to a “phasedown” of unabated coal and phase out of fossil fuel subsidies rather than a “phase out” of coal as it was framed in the preceding draft.
India’s power generation largely depends on coal and the government has repeatedly stated that coal power shall remain central to energy planning over the next two decades as the country moves towards better energy security and per capita access. While the move is in line with India’s development objectives, it can also be seen as an unrequited extension of the future of coal. The paragraph on low carbon transitions also includes a phase out of “inefficient” fossil fuel subsidies and targeted support towards the just transition of poor and vulnerable communities that are likely to be affected. India will be affected by the decisions made on energy transition here more so as it joins other countries to bring down emissions and also must continue to lift its own citizens out of poverty. India’s battle will be fought on many fronts, including rapid scaling up of renewables for clean power goals. Europe’s wealth was made on coal, and now it’s death will be on coal if the world doesn’t act, said Timmermans, but equity must regard the survival of all!
Loss and damage: The issue of Loss and Damage, long neglected as an unimportant side note in the Paris Agreement, emerged as a key area of discussions at COP26. Despite not being included in the main agenda of the COP, L&D saw the most enthusiastic and active deliberations since it was first mentioned in Bali 14 years ago. With several countries, particularly in the developing world, already witnessing mounting climate-related devastations, there was palpable urgency on taking the issue forward and putting together some kind of governance structure that would enable better technical and financial support to deal with climate-related L&D. A sore point at the negotiations, however, was the non-inclusion of any separate facility for funding towards L&D as was proposed by the G77+China group, which includes 160 countries, most of which are developing.
Importantly, there was movement towards operationalising the Santiago Network with agreements on the functions and processes related to the development of institutional arrangements required. Also key is the decision to establish the Glasgow Dialogue between Parties, relevant organisations and stakeholders, which will be held every year until 2024, for discussions on the specifics regarding the funding of activities to avert, minimise and address loss and damage associated with the adverse impacts of climate change.
Adaptation: Discussions on adaptation were yet again among the disappointments at the COP, with many parties expressing their dismay at the slow pace of progress compared to mitigation activities and the difficulty in securing any solid commitments around adaptation finance. The languishing status of funding towards adaptation, which continues to become an increasingly pressing requirement for several developing countries, saw several developing country parties raise urgent pleas for scaling up. While the COP Presidency urged developed countries to urgently accelerate provision of finance towards adaptation, the final text was seen by many as yet another year of watered down ambition on adaptation.
While on the agenda for COP26 was also the establishment of a global goal on adaptation, there has been little movement on this front, with almost no clarity how such a goal would even be assessed, measured or framed. To this end, the two-year Glasgow–Sharm el-Sheikh work programme was established with the sole purpose of formulating frameworks required to put in place a global adaptation goal and frameworks required for planning and implementing adaptation action.
Article 6: Market and non-market mechanisms to deal with emissions reductions in the Paris Agreement, also known as the infamous Article 6, was one of the big unresolved matters pending to be resolved at COP26. The Article seeks to set out modalities and a framework for the conversion of emissions reductions into tradable units which can then be used to offset emissions through purchase. As the successor of a failed market structure from the Clean Development Mechanism era, the issue carried the baggage of problematic accounting of emission reduction units between the generator (seller) and emitter (buyer) of the units. Additionally, there was the contentious carry over of the units from the previous attempt at setting up a trading mechanism. According to numbers published by the UNFCCC, there are currently over 8 billion such units that do not have a mechanism in which to be traded, mainly in large non-Annex 1 countries like Brazil, India, Indonesia and China.
With all eyes on how parties navigate tricky matters involving the transfer of these credits and how the emissions reductions bought and sold would be adjusted in the reporting of climate action by parties, deliberations on Article 6 were fraught with differences between parties as expected. After several rounds of formal and informal negotiations, and iterations of decision texts, the matter finally achieved closure late on Saturday with the adoption of a decision regarding all fictitious aspects of the Article and modalities. This is indeed a big win for the COP Presidency and multilateralism. But it hasn’t come without considerable compromises on all sides, and implications for what the mechanism will achieve in the years to come.
The final adopted text on Article 6 sees clear progress in eliminating “double-counting”, which implies the reporting of traded emissions reductions by both the host and the buying party, thereby skewing the accounting math on the global emissions inventory. The final text is an attempt to circumvent this problem by essentially creating two parallel tracks- one for compliance markets where companies generally buy carbon offsets to reduce their own emissions profiles and the other for voluntary markets which determine the extent of emissions reductions being done at the national level. The new rules also set aside 2% of the total issued credits for cancellation so as to ensure an overall mitigatory impact on the market. Additionally, a share of 5% of the credits have been set aside as the “Share of Proceeds” to go towards adaptation action.
On what happens to old credits accrued from the previous CDM regime (estimated to account for about 120 million tonnes), a compromise has been reached for the use of credits issued after 2012, but only in the first NDC period after which these credits would not be tradable under the Paris Agreement framework. While this is an important step to bridge the trust deficit between parties after the failure of the first market mechanism, there are criticisms that it would ultimately dilute the real emission reduction outcomes of the market mechanism.
While the decision on markets is definitely a step forward and gives much-needed impetus to put in place a standardised approach to trade emissions, a long-standing criticism of markets is that it simply offers a gateway for creative accounting without offering any real reductions in emissions on the global scale. The doors for cheap units to offset carbon from emissions-heavy industries have been kicked open now.
Finance/Long-term finance: Who pays and to whom? While the principles of equity and CBDR enshrined in the UNFCCC provide a pretty clear demarcation on the bearing of responsibilities on climate action, the issue of finance has been a constant thorn in the side of negotiations. And this year was no different. While the fact that developed parties were unable, after more than a decade, to meet their pre-2020 commitment to mobilise $100 billion received ample attention, there was little appetite to change this anytime soon.
Discussions on long-term finance, too, remained a non-starter in terms of concrete deliverables despite demands for considerable scaling up of financial commitments up to 2030 and beyond. A conclusion to discussions on LTF has disappointingly been kicked down the road to 2027 with three high-level ministerial dialogues on the issue planned every two years starting next year. Much to the deep disappointment of many developing countries, no movement on the agreement of a new baseline for future finance more in line with the requirements to scale climate action in most of the world will not bring much real climate action.
As it stands at the end of the two weeks, there is no new concrete goal to scale up finance flows after 2025, or any pathway that has been put forward to meet this goal at least over the next five years (which would have been the minimum requirement for any success on the matter. Instead, what has been pushed is a narrative of collectivism in funding climate action with a push for the expansion of the donor base, beyond the current group of developed country parties.)
The decisions on finance, given the skewed historic responsibility for climate change, is indeed one in which the US and the EU ought to have shown leadership as the world waits for reparations and rightful compensation. The issue is also one with the least consensus as developed countries continue to shirk and obfuscate responsibility, refusing even to engage on what climate finance actually means and what financial flows towards climate action would entail.