COP26 Insights, Governments will not lead on Climate response

by Michael Molitor

Climate Salad Contributor

I had agreed to write a piece summarising the outcomes of COP26 in Glasgow, but I had to wait for my anger to subside before putting pen to paper [or fingers to keys]. 

After having attended 18 of the 26 annual COP meetings, including Kyoto in 1997, Copenhagen in 2009, and Paris in 2015, it is now abundantly clear that we cannot rely on governments to take the lead in developing a meaningful climate response.

UN sponsored negotiations on climate change began in 1991 with the first meeting to draft the UN Framework Convention on Climate Change [UNFCCC] held in Chantilly, Virginia [I was there as a junior member of the US delegation].  In the 30 years which have followed, there has not been a single year when carbon emissions were reduced—in fact, carbon emissions have continued to rise unabated by any actions taken by governments under the global UNFCCC guidelines. 

The Climate doesn’t respond to meetings, it responds to action! 

Some people will respond to this lack of action with the comment; “just imagine how much higher carbon emissions would have been without the UNFCCC!”  Let’s be very clear, the climate system doesn’t respond to these types of silly comments—it responds to changes in chemistry which lead to changes in the physics of the atmosphere and oceans.  Our key objective is to try and maintain climate system stability and nothing else matters.

The key driver of climate system stability is the total amount of carbon in the atmosphere—the more it increases the higher the risk of destabilizing the climate system.  It is important to note the scientific community has little idea of when we reach the tipping point to destabilization.  It’s not the scientists’ fault—we are conducting a global unintended experiment with the climate system which never occurred in the past.  It is, under these circumstances, extremely difficult to predict exactly what will happen, where and when.

Total concentration of carbon dioxide in the atmosphere is expected to reach 415ppm [parts per million] by the end of 2021.  This has led to an increase in the globally averaged surface temperature of the planet of almost 1.2 degrees C [Celsius]. The key objective of the 2015 Paris Agreement is to keep temperature increases to below 2 degrees C and to make every attempt at keeping the increase to no more than 1.5 degrees C.  

The 1.5 degree C objective was probably impossible to achieve before COP26 but the lack of any real progress at Glasgow earlier this month now renders this target a zero-probability event.  Within days of returning to their capitals, President Biden approved a giant expansion of oil and gas leases in the Gulf of Mexico and Prime Minister Johnson’s government approved the first new coal mine in Britain in over 50 years.

The perverse carbon investment ratio

Here is the crux of the problem—in my humble opinion.  Global investments into high carbon activities worldwide in 2021 will be 20 times larger [US$2 trillion] than spending on decarbonization [US$200billion].  If this does not reverse quickly, all the statements, targets, and announcements which flowed out of Glasgow will become completely meaningless—yes, even more than when they were made earlier this month.  Estimates of the size of unpriced climate risks sitting across global capital markets exceed US$50trillion.  Unless the market quickly identifies and prices these risks, which is their principal function, then the perverse carbon investment ratio will remain. 

The glimmer of hope

One bright spot was the announcement that a group of investors, including Jeff Bezos’ foundation, are planning to acquire existing coal-fired power plants in Asia to shut them down quickly and replace them with an equal or larger amount of renewable energy power generation.  This is not only an absolute requirement if we are to have any hope of maintaining sufficient climate system stability, but it also represents the cheapest way of reducing an enormous amount of carbon emissions quickly.  

Governments including their financial regulators are reluctant to see climate risks priced accurately and quickly because this would lead to the biggest repricing of assets in history and have large impacts on their financial markets and national economies.  It is now clear that the market will need to take to lead to quickly identify and price these enormous climate risks.  This is really a matter of deciding which is worse, a quick repricing of fossil fuel assets which leaves most of them stranded or a destabilised climate system.

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The cost of the lost opportunity

It is abundantly clear that the Morrison Government in Canberra wants to protect fossil fuel assets with little interest in the consequences for a destabilised climate system.  One would have thought billions of dollars of losses from unprecedented fires and floods in Australia would have been enough to convince Morrison that the value of a stable climate system is incalculable yet we can easily put a price on the demise of Australian coal and gas assets—and, more frustrating, the even bigger economic opportunities which will flow from a decarbonised Australian economy—just ask Twiggy Forrest.