The COP26 Endgame: What to Watch If You’re Just Tuning In

Nov 11, 2021

(Bloomberg) COP26 climate talks are entering the endgame, and all-night sessions are getting increasingly fraught. At stake is how quickly the world will cut emissions in the next decade — a crucial period to curb global warming — and whether a functional market for trading carbon can be created.

As negotiators brace to go into extra time, running low on sleep and Covid testing kits, here are the things to watch:

1. Climate Action Plans

The mantra of this COP is “keeping 1.5 degrees alive.” That means limiting temperature increases from pre-industrial levels to 1.5 degrees Celsius, which equates to a much less catastrophic outcome for the planet than the 2.7 degrees scientists say we’re now on track for.

Still a Gap to 1.5˚C Above Pre-Industrial

One of the key demands from nations most exposed to climate change — think islands at risk of being inundated — was that countries with action plans that aren’t robust enough should be told to go away and have another go. They wanted new plans by next year, and the U.K. presidency plus the U.S. have backed that demand. An early draft of the COP agreement does indeed call for countries to come back by the end of next year with tougher plans. But will those lines survive the final arduous phase of talks?

2. Cash

At the heart of this summit is the issue of fairness. Developing nations say rich countries wrecked the planet as they industrialized, and it’s now unfair they’re thwarting others’ economic progress — and failing to provide enough cash to help poorer countries adjust. That’s why there’s so much talk about how much money will be on the table. Rich countries failed to meet a target of providing $100 billion a year by 2020 and now say that will happen in 2023. The focus now turns to what happens next. Some big numbers are being kicked around: India says it wants $1 trillion of international public funding just for itself. Another bloc representing African nations says they need at least $750 billion, and the demands go as high as $1.3 trillion. A key thing to watch is the split between grants and loans, and public and private funds. The last thing poor nations need is more debt; and private funds come with high interest rates. Also at issue is how much is put into adaptation versus mitigation efforts.

3. Carbon Markets

The Paris Agreement of 2015 left some unfinished business that negotiators still haven’t been able to tie up: how to standardize rules on trading carbon credits, or offsets. A deal on global carbon trading would be a big win as it would help cut emissions, spur investment in clean technology and funnel money to poorer countries. But there’s a health warning here: negotiators say no deal is better than a bad deal. That’s because an agreement that doesn’t impose strict rules could end up increasing emissions, and allow for creative accounting whereby the impact of offsets would be counted twice.

The term to watch is Article Six. There had been some progress going into COP26, though in recent days talks have stumbled again and a deal is in the balance. The main issue now is how much money will be siphoned off from carbon trading to help poor countries adapt to the ravages of climate change. A kind of transaction tax is on the table.

4. Fossil Fuels

The first draft of the COP26 summit conclusions included — for the first time — a line calling for the phase-out of fossil fuel subsidies and of coal. This was a big deal to COP insiders and activists, even though the G-20 has been calling for an end to fossil fuel subsidies for a decade. Several delegates have said they’re not very hopeful the lines will survive into the final draft, while campaigners are demanding that they stay in.

5. Will the China-U.S. Deal Change the Mood?

China and the U.S. unveiled a surprise deal late on Wednesday that will probably end up being seen as one of the major achievements of COP26. The fact the two biggest emitters are promising action together in the next decade despite their broader diplomatic standoff is a big step forward: Both agreed they should upgrade their 2030 pledges and come back in 2025 with fresh commitments for 2035. Still, the U.S. hasn’t managed to convince China to bring forward its peak emissions target from 2030. It remains to be seen if the pact is enough to change the broader dynamics in Glasgow — or indeed in the broader bilateral relationship. China is certainly not the only country that’s been objecting to some of the strong language in the drafts.

“I wouldn’t call it a game changer, but it’s a significant statement, showing that judging China’s commitment to fighting climate change on the sole basis of its president’s absence was a bit short-sighted,” said Jean-Pascal van Ypersele, the Belgian climatologist who served as vice-chair of the Intergovernmental Panel on Climate Change.

6. Did We Reach the Magic Number?

When COP26 started, the world was on track for 2.7 degrees of warming. That’s according to data crunched by the United Nations that takes into account all countries’ climate-action plans. The International Energy Agency reckons that if — and it’s a big if — all the pledges made at COP26 are implemented then the temperature increase slows to 1.8 degrees. A big decline for sure, but still far beyond what’s safe for billions of people.