Reflections on Glasgow and COP26

Reflections on Glasgow and COP26

Reflections Cecilia Aguillon, Director, Energy Transition Initiative

Severe weather, fires, floods, and droughts are already costing billions of U.S. dollars worldwide. Is it more cost effective to pay for the effects of climate change, which affects both developing and developed countries, or transition to an emissions-free society? Many people were counting on their governments to come together at the COP26 to urgently eliminate the causes of climate change. Gains were achieved in that an agreement was reached at the final hour of the summit, but many opportunities were missed as the agreement might not eliminate harmful emissions fast enough, and the language to eliminate coal and methane gases was watered down. However, clean energy technologies continue to develop on their own and some with the help of local policies and incentives, financial institutions pledged to move away from coal, and some of the major car manufacturers pledged to abandon production of combustion engine driven cars by 2035-2040. In addition, prior to the COP26 the United States and the European Union signed a trade agreement that is to support the import green steel and aluminum. Who knows, maybe the final arrangement, due by 2024, will include other green industries, including agriculture. Thus, meaningful action could be achieved outside COP through local policies and the marketplace. Leonardo Beltran, Non-Resident Fellow One of the key results of COP26 is the realization that there needs to be an all-in approach to face the challenges of the climate crisis, not only because the effort of a single jurisdiction will not be enough, irrespective of their relative contribution or size, but also because the speed at which the climate system is changing requires a corresponding action to coordinate globally across multiple fronts. Despite cautious optimism, stemming from pledges on finance, methane, reforestation, adaptation, and net-zero announcements of major economies, i.e., China, India, US, etc., today we are on an unsustainable path; and yet, Latin American and the Caribbean, one of the hardest hit regions in economic and health costs arising from the COVID-19 pandemic, compounded by more frequent and stronger weather related events as last year has shown, is demonstrating its commitment, resilience and leadership committing more than half of its countries to have at least 70% of renewable power generation by 2030. Marta Jara, Non-Resident Fellow It is common wisdom that in a crisis, things must get worse before the awakening to the urgency of needed change. Investment in energy infrastructure has been lagging demand predictions for some years now and markets’ early reaction to ESG risks in fossil fuels. But the ability to de-risk, assess and finance clean energy is still insufficient for keeping the development of new decarbonized supplies on track. It should not get too bad, as supply disruptions and price volatility can cause a social backlash of counter reactions and end up slowing down the net-zero journey. COP26 rightly focused on finance and addressed a key gap between aspirations and reality. New instruments and better governance, coupled with stronger political leadership, shall enable that the new high-level pledges translate into real projects on the ground.