COP-OUT? WHAT WAS THE OUTCOME OF COP26?
Whether we like to admit it or not, we in the developed world have benefitted from a destructive epoch of industrial growth on the back of rabid fossil fuel consumption.
The physical climate impact of this growth has and will continue to be disproportionately felt by the developing world so not only are we asking these countries to pass on their own epoch for growth, but we’re also asking them to suffer the consequences of ours and take one for the team. Unbelievably for many, China is still classified as a developing country and on current projections, this is expected to be the case until 2049 which unsurprisingly meets with the failure of COP26 to agree to phase out coal but rather phase it down!
The UN’s stated goal for COP-26 was to halve carbon emissions by 2030 - requiring a 45% reduction globally, and to increase assistance to the poorest countries to enable them to deal with the effects of climate change. The end game of these measures is to manage global warming to 1.5oc by the end of the century – in the context of current projections which predict a temperature increase of around 2oc. Woolly commitments made at COP26 may ultimately deliver a sub 2oc result but a lack of clear near-term (2030) plans to deliver on these means analysts believe this will result in a 2.4oc rise. This is still ahead of the post-Paris projections of 3-4oc, and there is hope that details may deliver closer to 1.8oc. However, a month on, we are all still waiting…
The resounding feedback from the conference in Glasgow was that it was a huge cop-out, however the reality is rather more positive, with 70% of the world’s economy committing to net zero, and an unprecedented move by the US and China to work together to “enhance ambition” on climate change which it is hoped will mean they’ll be able to “phase down” coal considerably quicker than anticipated.
All the countries that make up the G7 have updated their targets to put them on a pathway to net zero by 2050, which shouldn’t appear impossible to achieve when you consider that, in two thirds of the world, solar and wind power are now cheaper than new gas and coal plants. And it’s cost that is key to net zero - the $130 trillion of private capital agreed in Glasgow to accelerate the transition was undoubtedly remarkable, even if the developed world has failed to deliver on the commitments made in Copenhagen to support poorer countries’ transitions.
It’s the source of the capital that’s most remarkable. Just before COP26, on 29th October 2021, the UK Government confirmed that large UK-registered companies will have to disclose climate-related financial data from April 2022. This makes the UK the first G20 country to enshrine the mandate into law, subject to Parliamentary approval.
From 6 April 2022, more than 1,300 of the largest UK-registered companies and financial institutions will therefore have to disclose climate-related risks and opportunities on a mandatory basis – any company with more than 500 employees and more than £500m in annual turnover in the UK will have to disclose potential risks associated with climate change and the net-zero transition into annual reports. COP26 established the International Sustainability Standards Board (ISSB), which will set the global bar for standards on ESG (Environmental, Social and Governance) to complement the UK’s lead.
Whilst the environment and finance have not always been the closest of bed fellows, we have now turned a corner where investment performance will need to be measured against ESG criteria, as well as returns. In this context, net zero becomes much more deliverable – an inflexion point where public sector incentives and intervention are replaced by private sector desire and imperative.
The proverbial elephant in the room is that – whilst much is made of new development, new investment, new power plants, new electric cars, new homes etc – this forgets that the developed world is just that; developed.
The existing built environment contributes around 40% of the UK’s total carbon footprint. Almost half of this is from energy used in buildings and infrastructure that has nothing to do with their functional operation. Opinion varies over the built environment industry’s responsibility to address this energy ‘in use’. The net zero direction targeted by many in the industry does not include ‘in use’ emissions. This could be viewed as an attempt by the industry to ‘hand-off’ a problem, whereas, in reality, the net-zero economy represents a significant opportunity which we should all be wholeheartedly embracing – retro-fitting existing developments, improving assets into which capital has already been invested, improving operational power plants, initiatives to tempt people out of cars already on the road, educating and inspiring householders etc.
Building owners and occupiers are sat on opportunities to make tangible carbon savings, reduce their energy bills, and improve their energy security at the same time through a mix of on-site generation, demand reduction and smarter procurement - Carter Jonas can help deliver all of these outcomes for its clients.
If you think you would benefit from advice from our Efficiency and Procurement specialists, please contact Helen Melling or Becky Millward.
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