When the UK hosts the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow beginning on October 31, the global summit will aim to close the gap between the climate goals outlined in the Paris Agreement and the essential policy frameworks that will put us on course to reach those goals.
As final preparations are underway for the conference, we want to help break through some of the inevitable noise surrounding COP26 and focus on one of the most important ideas: Decarbonization is at the heart of the major issues that are on the agenda.
Countries planning new decarbonization commitments or targets should consider holistic, integrated strategies across all carbon-intensive sectors. Various stakeholders within financial institutions, consumers, and regulators are focusing on this issue and how to move from ideation to implementation. The first step is to recognize that these concepts are all interwoven: the financing, the transition to clean energy, and the role of the community. Here’s how to think about them as interwoven in a cohesive strategy.
A foundation of the international climate negotiations is a commitment of financial support for the transition to a global low-carbon economy and the adaptation to the impacts of climate change. Developing countries have long called for funds to be provided as grants rather than loans. The methods for raising and distributing “loss and damage” financing have taken on increased urgency for small island states, which include the world’s most vulnerable countries to climate impacts such as flooding, heatwaves, and drought.
For many years, the target has been to reach a certain level of climate finance commitments. The Organisation for Economic Co-operation and Development (OECD), which tracks committed climate finance, estimated in 2019 that a total value of $80 billion has been mobilized, falling short of the $100 billion per year target. The recent commitment by the Biden administration to double annual climate aid (to $11.4 billion) to developing countries will help close the gap.
What you need to know
Any major change, such as large-scale decarbonization, costs money. For example, one estimate of building a net-zero economy by 2050 is that it would take about $4 trillion USD worldwide by 2030 to achieve. The costs of adaptation to climate impacts will also need significant funding.
However, with these investments comes economic opportunities. Governments at all levels will be investing in their own transitions to decarbonized, climate-resilient economics as well as supporting developing countries. For example, the Biden agenda and the EU’s "Fit for 55" package seek to inject billions into their own economies.
The shift in emphasis—from financing proactive adaptation to financing both proactive measures and those that recognize some climate change impacts are going to be felt regardless—has implications on disaster financing as well as strategies by cities and other infrastructure providers to increase resilience of their systems in the face of climate impacts.
At the same time, a heightened focus on transparency will provide clarity around what constitutes a “green project” or “green finance.” The EU Taxonomy for sustainable activities—for which ICF developed the user guide—diminishes the risks associated with greenwashing by removing an unfair competitive advantage of marketing a “sustainable” or “green” product without it meeting science-based environmental standards. More barriers will also reduce opportunities for regulatory arbitrage, preventing companies from shifting assets to countries that don’t prioritize the environment.
Businesses should watch for any green financing arrangements—both positive and negative—that are likely to come out of COP26, as well as anything specific to their areas of focus, such as clean air or habitat protection. As existing capital pools dry up, there is an opportunity to tap new sources of capital. COP26 is likely to be a catalyst to both significantly increase the green finance market and drive finance to greener companies and countries.
Transition to clean energy
The global energy transition—moving from reliance on fossil fuels to renewable energy—will require the accelerated deployment of energy efficiency and renewable energy technologies. As energy demand skyrockets, countries see the need for major shifts in generation and consumption practices. Availability of affordable, clean energy will be vital to both meeting carbon reduction commitments while at the same time meeting growing energy needs.
But the transition requires shrewd choices, careful management, skill, and sensitivity. Once the low-hanging fruit of easiest changes have been made, the remaining changes will require newer technologies, redefined markets, and socioeconomic sensitivity to ensure success. That means there are also opportunities for new jobs and economic development. Opportunities for investment abound, and the same goes for partnerships and other creative collaborations for growth and development.
What you need to know
Setting a target is one thing, but achieving that goal is harder. As part of the Paris Agreement, most countries pledged to limit global warming to “well below” 2°C above pre-industrial levels—and at 1.5°C by the end of the century. This ambitious target will require rapid growth in renewable energy, storage, carbon capture, hydrogen, and electric vehicles (EV). A commitment to ramp up EVs in support of decarbonization targets requires an increase of renewable electricity, which also requires that utilities can meet the increased electricity demand. Countries will need to incentivize drivers and build EV infrastructure in order to turn EV ambitions into reality.
Not surprisingly, global regulatory structures in the realm of energy transition are uneven. Structural, permanent changes to energy supply, demand, prices, and supporting policies are needed. In a world where the grid is the critical enabler of clean energy at scale, new regulatory constructs are needed that equitably allocate costs and benefits. The current regulatory emphasis on cost-effectiveness metrics obscures the fact that the benefits of modern technology are unevenly distributed within our communities. The world needs to move toward more intentionally inclusive clean energy programs, such as figuring out how to decarbonize buildings in low-income neighborhoods.
The climate-related events of the past year—the Pacific Northwest heatwave, the floods in Germany—have reminded us of the vital importance of a reliable and affordable energy supply. Recent power cuts in Texas and in several provinces of China provide stark reminders that a reliable energy supply can no longer be taken for granted. Developing a resilient power market in the process of clean energy transition is crucial.
The “old standby” of energy efficiency shouldn’t be overlooked. At-hand energy efficiency technologies—and the support of green, energy efficiency—alone will tap 40% reduction of total energy consumption and significant energy-related GHG emissions. That success creates more of a buffer zone to power market resilience facing the impact of traditional fuel prices and extreme weather.
Mobilizing and communicating to stakeholders and citizens
The green transition is not only about technologies, targets, and new policy frameworks; it is equally about profound societal and lifestyle changes. Achieving decarbonization targets will require wide mobilizations of stakeholders, citizens, and communities—governments can’t go it alone.
The European Commission is a leader in this space with a large-scale participatory social movement called the European Climate Pact. ICF Next helped design the Climate Pact’s strategic, creative, and outreach approach. The EU-wide initiative invites people, communities, and organizations to play an active role in the green transition through pledging concrete climate and environmental actions. Its goal is to help mobilize a massive social movement of millions of people across the EU, promote a variety of climate actions (individual, collective, and all sizes), and facilitate co-creation, learning, and networking.
What you need to know
Governments should leverage effective climate communication and behavioral science to inform their approach. In terms of effective science communication, taking an active role in learning about climate science is key for mobilizing people to be engaged in the issue. This participatory model works under the assumption that greater involvement of the public will lead to more effective public science policy.
Communicators should harness the power of behavioral visibility and social contagion, as research shows that people tend to act according to what they believe others are doing. Social norms, such as knowledge of what others would say or do in similar situations, are powerful drivers of large-scale societal change.
When speaking about climate, the message senders—governments and private companies alike—should avoid widely used negative frames: disaster, fear, costs, loss, guilt, and blame. For example, “Our carbon footprint is too high, we must fly less and give up our cars.” These frames tend to backfire, spawning gloomy emotions and causing people to avoid the topic or feel powerless about it.
Instead, messengers should use the power of constructive frames to create new green narratives that connect the actions of decarbonization to the stories of people’s everyday lives. Connecting the idea that achieving decarbonizations goals will also satisfy the public’s aspirations, feelings, and lifetime goals—prosperity, jobs, health, psychological well-being, etc.—is powerful.
The road ahead
COP26 is an important moment on the road to addressing the global response to climate change. Our team will be paying close attention to the decarbonization announcements made by countries as part of the efforts to reduce emissions, and how they're weaving in the interconnected strands of climate finance, clean energy, and community engagement.
Visit the ICF Climate Center’s COP26 hub to read other insights around COP26 and check back for updates from our team attending the conference.