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COP26 Glasgow Daily Dispatch

The gloomy outlook that shrouded expectations for COP26 at the beginning of this first week may have cleared ever so slightly as we approach the end of the first week of the climate summit.

Day 4: A little ray of sunshine breaks through the clouds as week one of COP wears on

The glimpse of sunlight came from quick calculations performed by both the University of Melbourne’s Malte Meinhausen and officials at the International Energy Agency (IEA) on the impact of those new pledges made in recent days, including India’s net-zero commitment and the coalition on methane emissions.

The University of Melbourne’s study found that for the first time, the pledges made to date – if delivered – would give the international community a better than 50 per cent chance of holding temperatures to under 2°C.

The IEA, meanwhile, said that their analysis shows that fully achieving all net-zero pledges to date and the Global Methane Pledge by those who signed it would limit global warming to 1.8°C.

We must acknowledge that this is a big ‘if’ – the promises made by countries have not always been matched by delivery, and we cannot afford to count our chickens just yet. Indeed, the UK’s Shadow Business Secretary, Ed Miliband, warned against complacency even if 90 per cent of global GDP is now being covered by net-zero pledges (up from 30 per cent one year ago). And he singled out one of the naughty kids in class as a case in point: “Any progress is welcome, but we need extreme caution about declaring success on the basis of vague and often vacuous net-zero targets three or more decades hence. For example, Australia has a 2050 net-zero target, but its 2030 plans are in line with 4°C of warming.”

Nevertheless, the progress is sure to bring some new energy (pardon the pun) to the negotiations, with the objective of 1.5°C seeming a fraction less hopeless than it did a week ago.

Further positive tidings arrived on Thursday – Energy Day – with more than 40 countries announcing their commitment to shift away from coal in the 2030s or 2040s. Although it fell short of UK COP President, Alok Sharma’s ambition to ‘consign coal to history’, it will nevertheless demand that these economies proactively plan for early plant retirements and the transitioning of communities. That’s something that very few countries are currently doing very well, with only a quarter of signatories to the Convention currently having a just transition plan. Unsurprisingly, Australia isn’t one of them.

With announcements like these, though, social transition planning is no longer a matter that the Australian Government can deflect. Even if the Coalition has no intention of introducing policies designed to phase out coal itself, international commitments to curb the use of coal will eventually start to bite. And when they do, we owe it to those communities and workers to be ready.

Day 3: Finance community a potent force in race to net-zero

Perhaps the single most important catalyst for increasing global momentum on climate action and the clean energy transition over the past two years has been the increasing scrutiny by financiers and institutional investors on ESG (environmental, social and governance). Although I must give an honourable mention to the youth protest movement for supercharging the focus on climate justice.

One recent example of the power yielded by banks and investors has been on home soil, with the rapid decision by AGL’s Board to demerge the company’s coal-fired power assets from the rest of the business in significant part due to the declining tolerance of investors for exposure to carbon-intensive assets.

Given the immense influence of capital flows, it was therefore fitting that, with world leaders now out of the way, attention on day 3 of COP26 turned to the question of climate finance.

And the investment community did not disappoint. The headline announcement of the day was made by the UN’s special climate finance envoy (and former Governor of the Bank of England) Mark Carney, who revealed that he had assembled a coalition of over 450 banks, insurers and asset managers – who have at their disposal the eye-popping sum of up to US$130 trillion of private capital – to help economies hit their net-zero emissions targets by 2050.

While the coalition, known as the Glasgow Financial Alliance for Net Zero (Gfanz), was met with some scepticism from environment groups given that the organisations involved had not already aligned their spending with the commitment to net-zero emissions, it is nonetheless a clear sign that ESG expectations will continue to be ratcheted up in the coming years.

This will also be true for the reporting requirements, with the international accounting standards body, the International Financial Reporting Standards Foundation, announcing that it will task a new International Sustainability Standards Board with creating a single set of standards for ESG risks to ensure that information is transparent and comparable from company to company.

Larry Fink of BlackRock, the world’s largest asset manager, sounded a warning though that the increasing decarbonisation expectations being placed on publicly listed companies would need to also be applied to businesses in private hands, otherwise that would set up “the biggest capital markets arbitrage in my lifetime”.

It’s a timely reminder that the economic transformation will only be complete when even the most reticent participants join the task, and that we will need to engage with these actors to ensure that they are part of the solution.

Day 2: Government showcases CCS as global momentum builds to phase out gas

The Prime Minister’s whirlwind trip to Glasgow has come to a close, and he and his press entourage return home after a “technology not taxes” campaign that the Australian Government seems to believe has been a very effective offensive strategy.

Indeed, day two of the World Leaders Summit seemed to gift the government some reinforcement from an unlikely corner. The European Commission, together with the European Investment Bank and multi-billionaire Bill Gates, announced that they would establish a €1 billion scheme to support public and private partnerships in clean technologies including hydrogen.

“It’s innovation that leads the way”, President of the European Commission Ursula von der Leyen stated.

And the innovation that the Australian Government wanted to talk about was carbon capture and storage (CCS). A very large model of the new Santos CCS hub at Moomba in South Australia took pride of place at the entry to the Australian pavilion for day two – an initiative made possible by the government’s recent change to the Emissions Reduction Fund rules that now allow CCS projects to earn carbon credits at taxpayer expense.

Amusingly – and perhaps the cause of an unpleasant surprise to Australian officials when they first discovered it – Australia’s pavilion is located just a few strides away from a prominently placed pavilion emblazoned ‘the Methane Moment’. Sound as it might like an ad for an 80s cigarette brand, it is in fact the name of a co-ordinated campaign ‘by 30 international organisations across 70 countries’ calling on world leaders to dramatically reduce the use of methane. The rationale being that with methane 80-times more potent than carbon dioxide, and with a shorter shelf-life, this is ‘the single fastest strategy’ to slow global warming.

And it would seem that many leaders are answering the call. Joe Biden announced that a US-EU-backed pledge to slash methane emissions by 30 per cent by 2030 now has over 100 countries signed on. That’s tidy progress for a campaign that began in September with just nine founding signatories. However, Australia was a notable absentee from the pledge, joining countries such as China, Russia, India and Iran in refusing to sign up to the pact.

All told, it underlines the fact that even as the Coalition works as frantically as it can to shore up the gas industry from decline, the very ground is shifting beneath its feet.

Day 1: Parallel universes at COP26

The Scottish Events Campus in Glasgow swelled to maximum capacity on Monday as around 10,000 delegates flocked into the sprawling site on the banks of the River Clyde from early morning, forcing organisers to issue alerts to delegates about long delays in accessing the venue.

Once inside the campus, the event seemed to unfold in two parallel universes – one for the world leaders and their delegations, with virtually no observers allowed to attend due to stringent COVID-19 distancing measures – and one for everyone else.

In the latter, you could liken the atmosphere to a World Expo, with large groups of NGOs, business and industry delegations making their way between pavilions, side events, meeting rooms, cafes and lounges – with the occasional politician, celebrity, activist or journalist passing through the crowd. In these orbits, the conversation is focused on opportunity, solutions, and the equity of the transition.

It’s in this outer area of the blue zone, that you will find the Australian Government’s first-ever (or first in a very long time) pavilion, which by Monday afternoon was packed with a VIP crowd of energy agency heads (Ian Learmonth, Clean Energy Finance Commission, and Darren Miller, Australian Renewable Energy Agency), renewable energy proponents (Fortescue Future Industries, Sun Cable), Santos (which has just announced a financial investment decision for a carbon capture and storage hub at its Moomba site), politicians and recovering politicians (Senator Sarah Hanson-Young, High Commissioner to the UK George Brandis).

The space will be used throughout the week as the stage for telling the story of ‘the Australian way’, with the launch of the Federal Government’s forthcoming Low Emissions Technology Statement expected to be launched there on Tuesday morning Glasgow time.

Meanwhile, just a few hundred metres away – but seemingly a world away from the conference halls of the convention – around half of the attending world leaders delivered their opening addresses to the conference throughout the afternoon. The rest will come tomorrow.

The scene was set by a spine-tingling keynote address from the world-renowned natural historian, Sir David Attenborough, who threw down the gauntlet to the assembled leaders to take responsibility on behalf of future generations and to “halt carbon emissions this decade”.

Let’s hope it made an impact. One glimmer of light came towards the end of the remaining speeches with India’s Prime Minister, Narendra Modi, committing to achieve net-zero by 2070 – some welcome progress from a country that had as yet refused to adopt a decarbonisation deadline. Mr Modi also pledged for half of India’s electricity to come from renewables by 2030.

Australia’s song sheet, however, remained the same. Prime Minister Scott Morrison used his three minutes to espouse the virtues of ‘technology not taxes’, telling leaders that ‘the challenge of combating climate change will be met by those who are frankly largely not in this room. It will be our scientists, our technologists, our engineers, our entrepreneurs, our industrialists and our financiers that will actually chart the path to net-zero.’

The subtext of the PM’s message was clear: don’t look to us for new policy; we just need to wait for new kit.

It’s a conclusion that seems to have been formulated in another parallel universe from the urgent existential threat so clearly outlined by Sir David Attenborough, failing to acknowledge that we already have the technology we need to decarbonise large parts of our way of life, like our homes and transport, and that the real missing piece of the puzzle is policy to accelerate that change.

Let’s hope other world leaders are listening.