Nick Wayth finds serious intent and big change for the energy industry amid COP26’s early outcomes…
We’re halfway through and it’s that jittery point in a COP where we’re all hoping and fearing for the UN talks. Arcane and unwieldy, will they deliver the vital overarching agreement needed to keep Paris alive, to firm up its rulebook and, ultimately, to add up to a future within 1.5C?
Whether Glasgow lives up to those expectations or falls short, we’ll know in just a few days. But if that’s all we focus on, we’d be ignoring the significance of what we’ve already seen in week one.
Greta Thunberg and others on the streets of Glasgow have suggested that COP26 has failed – but having been around the Blue Zone myself last week, hearing and talking to delegates about the multilateral deals reached across a range of sectors, I’m certain that COP26 is already transforming what global society expects of the energy industry as well as the industry’s willingness and ability to live up to those expectations.
Yes, I’m an optimist, but I’d pick out three early COP26 outcomes that have left my glass half full and that have the potential to hit climate change where it counts.
Beginning of the end for coal?
First, a convincing body of countries, banks and organisations have signalled determination to rein in the dirtiest fossil fuel. Burning coal makes the highest contribution to global carbon emissions; an end to its unabated use would be a monumental step towards the 1.5C goal.
Thursday’s array of pledges and commitments were cumulatively significant. The Global Coal to Clean Power Statement, which 46 countries have now signed, was hailed by the UK as bringing ‘the end of coal in sight’, committing them to the phase-out of coal-fired power during the 2030s (for major economies) and the 2040s (for the rest of the world).
The addition of five of the world’s top 20 coal power generating countries – South Korea, Indonesia, Vietnam, Poland and Ukraine – is encouraging, less so the absence of the biggest players China, India, USA, and Japan who together account for 76% of the world’s coal-fired power generation. But it comes on top of separate commitments by 25 countries and public finance institutions, including the US, to end international public support for the fossil fuel energy sector by the end of 2022.
This is significant not just for the end of coal and its emissions, but also for what will replace it. The UK has already cut its coal consumption for the power sector by 95% since 2000 and is on track to take coal permanently off the grid by 2024. As other countries follow us on this journey, we have the opportunity not just to share our experience and good practice on coal phase-out, but also to export technologies and know-how in replacements – fast-growing renewables and smart grids.
Reining in potent methane emissions
Second, what’s been agreed on methane is as notable as coal.
The short-term potency of methane as a greenhouse gas makes cutting these emissions one of the fastest ways of mitigating manmade climate change. In fact its impact on the climate is 28-34 times that of CO2 when looked at over 100 years, and even greater in the shorter term.
So the Global Methane Pledge to cut global methane emissions by 30% of 2020 levels by 2030, brokered by the US and EU with more than 100 other countries last week, could have a very significant impact – according to the IPCC it could prevent 0.3˚C of global warming to 2040.
Energy has a major role to play in this, with a third of methane emissions originating from fossil fuels. The fact that these pledges are for 2030 reflects the urgency of this shift, and adds pressure for operators individually and through partnerships such as the Methane Guiding Principles, of which the EI is a supporter, to move further and faster.
Progress on methane has long been seen as lagging, despite the IEA estimating that it’s technically possible to avoid 75% of current methane emissions in the natural gas supply chain, and that up to half could be avoided at zero net cost.
Transforming the financial proposition
Third, I think Glasgow has done something else that until now has held back the global energy transition. It’s acted to provide the tools. And by tools I don’t mean technology – we already have most of the technology and know-how – but the finance.
I was formerly responsible for building the business case in bp for its diversification into renewables. I’m pleased to say I was largely pushing at an open door there, but I know that’s not the case everywhere.
There’s no silver bullet on mobilising capital for the transition, but a cumulative raft of public and private finance initiatives from week one in Glasgow will go a long way toward dissolving boardroom barriers to emissions reductions. This includes broad coalitions like the Glasgow Financial Alliance for Net Zero, and more targeted measures like the declaration on the just transition in South Africa. This latter formal partnership, which will deliver $8.5bn over the next 5 years to accelerate South Africa’s decarbonisation, could prove a good template for financing the transition around the globe.
And in the UK, by 2023 firms will be forced to disclose their plans for transitioning their operations to meet the UK’s 2050 net-zero target. Although formal net zero commitments are not mandatory, societal pressure is likely to lead many firms to put them in place. The acceleration of this will mean acceleration of low-carbon heating, energy efficiency improvements, and other emissions-reducing measures.
Week two is important, but signals matter
In addition to these three areas, week one saw other promising developments – on clean energy, deforestation, as well as some (but not all!) individual country commitments. To mix my metaphors, the devil of all of this will be in the detail, and the proof in the pudding. But that is perennially the case at intergovernmental summits, it’s the nature of the beast.
Irrespective of that, and of whatever the crucial UN process delivers by this coming weekend, I believe COP26 has already sent signals that will filter through our industry, that strengthen our hand to go back to our organisations, our stakeholders, our employees and our investors, to say with certainty that this is happening, change is coming fast, and we need to get out ahead of it.
The Energy Institute is committed to providing the workforce with the necessary professional skills, know-how and recognition to deliver this change. Our task, and that of the entire industry, as we come out of COP26 has to be to step up, to play our part in implementing the outcomes to the highest level of ambition, holding our political leaders and industry peers to account, and working together to deliver emission reductions and a just transition that is good for everyone.