Climate finance issues were the center of discussion on November 3, 2021, but climate finance issues permeated through nearly all other aspects of the Week One discussions at COP26.
Several key takeaways from climate finance day were:
- The U.K. announced plans to make the U.K. the first "net-zero"-aligned financial center, and as part of the proposal, U.K. financial institutions and listed companies will be required to detail how they will adapt and decarbonize to meet a net zero economy by 2050
- A group of more than 450 firms across 45 countries and 6 continents pledged a historic $130 trillion of financial assets toward climate commitments
- Developed countries reiterated a pledge to provide $100 billion to developing countries, but acknowledge the goal will not be met until 2023, three years after the original due date
- Least developed countries raised concerns over access to climate funds even if funding is available due to burdensome application processes
Relatedly, negotiations over carbon markets continued during COP26, and reports are that there is disagreement over how much revenue from trading should be provided to developing countries, which has been a repeat issue in carbon market negotiations in the past. While there are reports that countries which have previously blocked deals on carbon market principles are ready to make concessions, whether that will move the needle on carbon market negotiations remains to be seen.
Other climate finance-related updates included commitments to cut emissions and decarbonize the global economy, but such commitments would require significant changes to markets and infrastructure at high costs. For example, India not only pledged a target of net-zero emissions by 2070, but also vowed half of the country's energy would come from renewable sources by 2030, which would require adding 400 GW of energy in eight years, while historically it has averaged 8 GW per year. However, the Indian prime minister made it clear that in order to do this, India would need finance from rich, historic emitters.
Commitments to move away from coal-fired power were made by 40 countries, but did not include major coal-producing countries like the United States, China, and Australia. However, in a separate pledge, twenty countries, including the United States, pledged to end public financing for "unabated" fossil fuel projects, meaning projects burning fossil fuels without using technology to capture carbon dioxide emissions. Elsewhere, 42 countries made a commitment to goals targeting clean technology and sustainable solutions in four categories: clean power, zero emission vehicles, near-zero emission steel, and hydrogen energy.
- Expect negotiations over the carbon market to continue as one of the prominent issues of COP26
- Transportation day (November 10) discussions may include commitments to replacing fossil-fuel fleets with electric vehicles and other changes that could influence the character of the transportation industry, including aviation, shipping, and more
- Commitments and pledges may have industry-changing effects for renewable energy, fossil fuels, and manufacturing industries, and more may come from Week Two as negotiations continue