COP26 at the end of week one: progress despite the fault lines

A lot is at stake at COP26 in Glasgow, and after the first week of negotiations, we have seen the good and the bad COP. Despite the exposure of historical and regional differences on the world stage, we've also seen evidence of progress in negotiations to bring the world closer to achieving the goals of the Paris Agreement.

The focus of COP26 is twofold:

• encouraging individual countries to significantly increase the ambition of their emissions reduction commitment as part of their Nationally Determined Contributions or NDCs, in particular mid-term 2030 targets; and
• finalising the rules to operationalise the Paris Agreement.

While the first attracts most of the attention with the announcement of new individual commitments and multinational pledges, the second is just as important as it delivers the means for measuring progress and holding each party to account against their commitments. Although there has been some progress and attention-grabbing announcements, much of the fine detail will be hammered out this week.

New pledges and commitments

A lot of attention in the lead-up to Glasgow was on 2030 targets. Before COP26, the IPCC warned that time was running out to reduce emissions at a rate necessary to be aligned with a 1.5 degree temperature increase. On the present emissions trajectory, the IPCC estimated that the world would exhaust its remaining carbon budget before 2040, locking in a 1.5 degree increase. The emissions reductions that can be achieved in the next 10 years will therefore largely determine whether the world has any genuine prospect of keeping the average increase in global temperature to less than the stretch goal of the Paris Agreement.

Consequently, the focus of the British Government as the COP host has been to encourage significantly new and ambitious emission reduction commitments by 2030 – the EU, UK and USA among others all announced significant increases to their interim targets well before the conference got underway. Despite a number of large emitting countries not updating their NDCs or increasing their 2030 interim target, there were other commitments including by Australia and India to reach net-zero emissions by 2050 and 2070 respectively. Net-zero emission commitments now cover about 85% of the world's emissions.

In parallel, there were a number of significant multi-national pledges made during the first week of the COP:

• More than 100 world leaders promised to end and reverse deforestation by 2030. The countries who have signed the pledge cover around 85% of the world's forests and include Brazil, Indonesia and the Democratic Republic of Congo where some of the largest areas of forests have and continue to be cleared. Almost $20bn in public and private funding was also promised to support the initiative;
• 103 countries, including 15 major emitters, signed up to the Global Methane Pledge to cut methane emissions by 30% by 2030. The signatories account for 40% of global methane emissions;
• More than 40 countries and some major energy companies committed to phase out coal fired generation, by 2030 for developed countries and by 2040 for developing countries. The Global Coal to Clean Power Transition Statement was part of a broader coalition of 190 countries and financial institutions that have agreed to phase out coal power and end support for new coal power plants;
• Although Australia was a notable omission from both the methane and coal pledges, it launched the Indo-Pacific Carbon Offset Scheme to support emissions reductions in the region by providing investment for projects. Fiji and Papua New Guinea were early signatories to join the scheme. This announcement was among many bilateral agreements, including those designed to take advantage of opportunities under the Paris Agreement to transfer emission abatement between countries that occurred in the first week.

At the end of the first week, the International Energy Agency reported that current national commitments together with the pledges made at COP26 may be enough to keep the average temperature increase to below 2 degrees – 1.8 degrees to be exact. This however was premised on all commitments being implemented in full and on time when, in most cases, few countries have the domestic policies to deliver on their commitments. And it is still well short of the 1.5 degree goal.

Fault lines between COP26 participants

It would not be a COP conference unless national and regional differences were exposed, and to some extent the usual suspects were on display during the first, especially finance. The fact that the US$100bn of climate finance required to be contributed by 2020 had not been achieved provided grist to the mill for the developing countries to accuse developed countries of shirking their responsibility to support those least able to mitigate emissions and adapt to climate change. This was also played out in discussions over loss and damage, where calls were made for mechanisms to assure finance to respond to climate related disasters. A roadmap has now been developed by Canada and Germany to get to the $100bn by next year.

Almost, but not quite, there on the Paris Agreement Rulebook

Some of the fault lines were also on display as negotiators continued endeavours to finalise the rulebook for the Paris Agreement. It was a common report during the first week that some delegations were adopting, at times, intransigent positions in negotiations and thereby frustrating progress until such time as other concerns were addressed, whether related to the agreement or not.

Two key areas which remain outstanding concern the rules for Article 6, which establishes mechanisms (including market-based mechanisms), for international mitigation transfers, as well as the rules relating to transparent accounting and reporting.

Article 6

Article 6 is crucial for achieving the goals of the Paris Agreement, especially in mobilising private finance to invest in emissions abatement projects. Nonetheless, key points of difference that emerged in COP conferences since 2015 remain to be resolved, including:

• double counting: while in principle the parties agree on the need to avoid double counting when emissions abatement is transferred between countries, the differences in parties' NDCs and their individual approaches to emissions reduction domestically makes it challenging to agree on mechanisms for adjustment and treatment of transfers. In this respect the bottom-up approach of the Paris Agreement where each country proposes their own activities as part of their NDC is creating a real challenge for developing common rules to account for emission transfers;
• share of proceeds: this issue relates to whether the proposal to levy a 2% charge on transfers under the Article 6.4 mechanism (referred to as the sustainable development mechanism) to fund climate adaptation projects should apply to any bilateral or multilateral transfers under Article 6.2. The EU and US have made clear their opposition to extending the levy to any such arrangements;
• CDM transition: if additional and significant emissions reduction is to be achieved, then the case can be made to exclude any carryover of projects or credits from the Kyoto Protocol since these would undermine ambition. After all, credits for CDM projects represent emissions abatement that has already occurred. Work pre-COP assisted in progressing an options paper, which identified the option of transitioning some better and more recent projects to Article 6.

Drafting for Article 6 continued through the first week via informal contact groups established by the technical bodies. Earlier drafting for Article 6 revealed heavily bracketed text indicating options and proposals which had not been agreed. However, the final draft decision text issued over the weekend indicates a narrowing of some of the points of contention, with a number of bridging proposals emerging together with a slightly more positive tone from the contact groups.

Accounting/reporting

Often referred to as the backbone of the Paris Agreement, the agreement to develop consistent rules for accounting and reporting of implementation of NDCs and especially emission reduction outcomes is one of its key features. While the framework and principles had been agreed at COP24 in Katowice, much of the detail to be developed is highly technical. Nevertheless, getting the metrics right is critically important to ensuring transparency and enabling each country to hold each other to account. This has been a key focus for the Australian delegation and remains so during COP26.

Reports from Glasgow are that negotiations on accounting and reporting are not moving, or not moving as quickly as some countries would like. Differences still exist on some fundamental points such as agreeing common timeframes for measurement and reporting, particularly in the context of the five-yearly NDC review and global stocktake cycles under the Paris Agreement. There remains concern that the differences, especially between developed countries (who generally want standard uniform rules) and developing countries (who generally want to determine individually how to report against NDCs), will be too great to bridge at Glasgow.