Macro Insights Weekly: What to expect from COP26
- The overarching goal is to secure global net zero by mid-century…
- …and keep global warming of no more than 1.5 degrees Celsius within reach
- Reducing conventional energy production for renewables is key
- So are measures to improve the capacity to absorb a variety of global climate shocks
- Green finance is an integral part of the race to fight climate change
Over the next two weeks, representatives from countries bound by the United Nation’s Framework Convention on Climate Change will gather in Glasgow for the 26th annual “Conference of the Parties,” better known as COP. Expectations are modest for this gathering, as reaching a consensus on far-reaching measures to deal with climate change is a herculean act.
The gathering is nonetheless crucial and likely consequential, especially for Asia, a region where over 1.5bn people live in the tropics. Higher temperature and rising sea levels will likely wreak havoc in food and water supply, cause large migration of the displaced from the coasts, harm infrastructure and production, and inflict major losses of lives and livelihood.
Hence the urgency to develop zero-emissions technology and setting aside resources to deal with the forthcoming damage from global warming. At a minimum, the hope is that the gathering in Glasgow will add momentum to the race to mitigate climate change and adopt to global warming.
The overarching goal is to secure global net zero by mid-century and keep global warming of no more than 1.5 degrees Celsius within reach. To do that, countries are being asked to come forward with ambitious 2030 emissions reductions targets that align with reaching net zero by the middle of the century.
The UN is focused on the following themes, all which will be discussed at length in Glasgow:
• Accelerate the phase-out of coal
• Curtail deforestation
• Speed up the switch to electric vehicles
• Encourage investment in renewables.
Additionally, since the climate will continue to change even as we reduce emissions, there will be a major push to enable and encourage countries to protect and restore ecosystems, build defences, warning systems, and resilient infrastructure and agriculture.
Such goals can only be attained through securing a considerable amount of resources, which put green finance at the core of the agenda. Developed countries are expected to provide at least USD100bn per year in climate finance, while international financial institutions need to play a major role too. Ultimately, trillions in private and public sector finance would be required to secure the global net zero goals.
Traditional and frontier financial technologies have a major role to play in this regard, offering innovative green solutions to investing and fund raising, as well as a wide range of government-led and market-based instruments for green intermediation.
Without multilateral initiatives and domestic consensus and coordination, humanity will not be able to rise up to this generational and existential challenge. Toward this, COP26 should see the finalization of the Paris Rulebook, the detailed rules that make the Paris Agreement operational. There should also be a number of plans released about accelerated action to tackle the climate crisis through collaboration between governments, businesses and civil society. Let’s hope these plans lead to meaningful action.
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