How the world could miss its climate goals
At the end of October, all eyes will be on the 26th UN Climate Change Conference (COP26) in Glasgow, Scotland. The overdue summit is widely touted as the world’s last best hope to slash emissions to at least half of 2010 levels in just under a decade if we are to prevent average temperatures rising above 1.5C. Any triumphs in Glasgow will be a realization of the ideals enshrined in the Kyoto Protocol two decades ago, and the world’s first formal steps toward net carbon neutrality, building on the groundwork laid by the 2015 Paris Agreement.
We are in a decisive decade for tackling climate priorities and making substantive progress on curbing harmful emissions responsible for temperatures rising faster than anticipated, according to reports by the Intergovernmental Panel on Climate Change. Recent findings demonstrate how, despite bold targets and ambitious deadlines, most countries are not doing nearly enough to initiate critical transformations that are key to meeting shared climate goals. Further inaction, and reported pushback by countries such as Australia and Japan, risk diminishing such a rare opportunity for taking decisive action. The world cannot risk COP26, and future high-level climate summits becoming occasions for much pomp, circumstance and fanfare, with little to nothing to show for it.
While the agenda in Glasgow has largely been narrowed down to four key areas, i.e., finance, energy, transportation, and industry, very little discourse is available on emergent threats to growing consensus on urgent climate priorities. In finance, current commitments are commendable but far from ideal levels given how crucial concessional finances are for the world’s poorer nations. The developing world is the least equipped to tackle climate priorities mandated by far-off advanced economies that are yet to fulfill promises to provide as much as $100 billion a year in climate finance.
COVID-19 has shifted priorities across the developing world in favor of stemming socioeconomic collapse rather than pursuing the perceived “luxury” of transitioning battered economies away from a dependence on cheap, readily available fossil fuels. It is a tall order for the wealthier economies, which remain the world’s biggest emitters, to demand acquiescence from much of the Global South while not making adequate support mechanisms available to reduce the massive burden that are climatefocused, whole-of-nation transitions. Ideally, sustainable progress on climate change mitigation is only achievable if the global response is not just fast but also just.
It can only be hoped that COP26 will address some, or hopefully all, of these concerns given how a warming planet constitutes a crisis for all, requiring massive mobilization and adequate responses from every country. Unfortunately, there is a growing, less discussed, risk of climate change-related opportunism in global finance, focusing on secretive investments made by littleknown private equity firms into increasingly discounted fossil fuel assets. Since 2010, private equity investments in some of the world’s dirtiest energy sources have totaled more than $1 trillion, which is roughly $100 billion a year — or the same amount of money wealthier nations have committed to providing the developing world in climate finance.
Pressure is building on the fossil fuel industry, forcing many companies to adapt business models swiftly due to changing regulatory environments, shareholder concerns and increased scrutiny on investments in upstream projects. An energy sector trying to rid itself of fossil fuels creates lucrative opportunities for private equity and shadow financing seeking to profit from underpriced assets still delivering returns, but could end up potentially stranded as climate-focused transitions accelerate.