COP26:  Showdown on fossil fuels?

Climate Economy

COP26: Showdown on fossil fuels?

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With climate impacts worsening, there is massive pressure on organizers and delegates to deliver outcomes at the upcoming U.N. climate talks. Here’s what to expect. 

The clock is ticking. The U.N. climate conference, COP26, will begin in Scotland in November. Hyperbolic language is often used to describe climate conferences, but COP26 is expected to be one of the most important ever held. Scientists, governments and the public know we are running out of time to secure a liveable future. What happens at COP26 will determine whether we succeed or fail. 

COP 26 comes six years after the U.N. Paris Agreement, the legally binding treaty aimed at limiting global warming to well below 2 degrees Celsius, preferably 1.5 degrees, compared to pre-industrial levels. Although Paris was internationally lauded when it was signed, the years since have been a brutal reality check about the difficulties of turning paper agreements into decisive action and about maintaining international climate momentum. Climate denier, Donald Trump, not only pulled the United States out of the agreement, but his victory also emboldened other rogue climate actors, such as Jair Bolsonaro of Brazil.

Although Trump is out of the picture, the world continues to invest in fossil fuels. Sixty banks alone have poured $3.8 trillion into fossil fuels since the agreement was signed. In the years since Paris, at least another 200 gigatons of greenhouse gases have been emitted. The five hottest years on record have occurred since 2015 too. Although 1.5 degrees remains the goal, without radical action we are currently on track to reach 3 degrees, according to the U.N.’s 2020 Emissions Gap Report.

Although Trump is out of the picture, the world continues to invest in fossil fuels.

Every day our climate emergency worsens. The latest report from the world scientists in the International Panel on Climate Change was described as a “code red” for humanity. The recent floods in Europe and wildfires and soaring temperatures in the Arctic and Pacific Northwest are deadly reminders of the need for urgent action. No one is immune from our rapidly warming world. Federal disaster declarations indicate that nearly one in three Americans have experienced an extreme weather disaster this summer. 

The coronavirus crisis has also overwhelmed and preoccupied most of the world’s governments, stalling climate action. But what COVID-19 has also done is demonstrate just how fast governments can act in a crisis if they really need to. Out of this crisis and its economic fallout, we are also afforded a generational chance to build back greener with a transformative clean and just transition.  

In the middle of our climate and COVID crises comes the pivotal COP 26 summit, already delayed by a year due to the pandemic. The conference is engulfed in controversy, with more than 1,500 civil society groups calling for a postponement due to what they say is “vaccine apartheid.” Indigenous environmental and climate groups have also called for the talks to be postponed.

All signs are that the COP will go ahead, however, with intense pressure on delegates to build on what was agreed in 2015. The Paris Agreement outlined how every five years countries must revisit their promises and increase their emission-reduction ambitions. Paris was also the first step to decisive action, but it did not include the legal or logistical mechanisms needed to transform domestic and global policies. So a huge chasm remains between pledges by countries to achieve net zero and detailed, legally binding plans to get there. 

A huge chasm remains between pledges by countries to achieve net zero and detailed, legally binding plans to get there. 

Some officials have already conceded that COP may not deliver the emission reductions needed. 

On the official COP website, the U.K. government has outlined four key goals for the conference: 

  • Secure global net zero emissions by mid-century, keeping 1.5 degrees within reach, with countries asked to bring ambitious 2030 emissions reductions targets that align with reaching net zero by 2050;
  • Adapt to protect communities and natural habitats;
  • Mobilize finance, with developed countries making good on their promise to contribute $100 billion per year by 2020;
  • Work together “to deliver.”

Many experts see the most important results from COP will be the number of major polluting countries who not only pledge to reach net zero by 2050 but come with detailed plans; coupled with equally detailed plans on how to end fossil fuel exploration and speed up the energy transition. Finance will also be key with hard commitments on cash from richer nations essential. Countries such as Indonesia and Brazil have said their emission cuts should be explicitly linked to finance from richer nations.

In the last few days, there have been some positive signs of action. Notably, China announced it will end its financing for coal-fired power stations abroad, although it has not committed to stopping building them at home. Seven more countries have signed a “No New Coal” agreement to stop building new coal power plants. In September, Denmark and Costa Rica launched the Beyond Oil and Gas Alliance, which seeks to end the extraction of oil and gas by mid-century. 

At the U.N. General Assembly, U.S. President Joe Biden confirmed his country will become the world’s largest provider of climate finance, announcing that the U.S. will provide $11 billion by 2024. This is a step towards the $100 billion annually rich nations should be providing, but less than the $40 billion that climate activists believe the U.S. should pay. Biden must also get the spending through Congress. 

Those investing in clean technology look set to gain, whereas those investing in fossil fuels are set to lose. 

The U.S. and E.U. have also recently launched a Global Methane Pledge that targets a voluntary 30% reduction of the “other” potent greenhouse gas by the end of the decade. This has been described by Bloomberg as potentially the “biggest win” for the COP.

Meanwhile, many of the world’s leading climate scientists are calling on Biden to completely stop federally-authorized fossil fuel expansion by banning new federal fossil fuel leasing and drilling on public lands, to stop issuing permits for fossil fuel infrastructure projects, end fossil fuel exports and subsidies, and more.

No matter what happens at COP, there will be winners and losers from a business perspective: As the global energy transition gathers steam, huge opportunities exist in fuels like green hydrogen, in driving the electrification of vehicles and decarbonizing of the global housing stock. Those investing in clean technology look set to gain, whereas those investing in fossil fuels are set to lose. 

Some of the biggest financial losers will be the biggest oil companies, who are still not aligned with 1.5 degrees unless they plan for major production declines. Some face cuts of 50% or more by the 2030s, according to a recent report by Carbon Tracker. As Mike Coffin, report co-author said: “If the world is to avert climate catastrophe, demand for fossil fuels must fall sharply. Companies and investors must prepare for a world of lower long-term fossil fuel prices and a smaller oil and gas industry and recognize now the risk of stranded assets that this creates.”

Written by

Andy Rowell

Andy Rowell is a freelance writer and contributing editor to He is based in the U.K.