Big expectations and even bigger headlines – Energy day at COP26 was always going to be one to watch. Over 40% of global emissions come from energy use by industry and buildings. Tackling these emissions is key to maintaining a sub 1.5°C world. COP26 President Alok Sharma said that ‘COP26 must be the COP that consigns coal to history’. But we’ve had big headlines and snazzy catchphrases come out of many previous COPs which haven’t materialised – so are the Glasgow commitments any different?
Coal was top of the agenda on Day 4. There was the expansion of the Powering Past Coal Alliance and the launch of the International Just Transition Declaration. It was a heady mix with different combinations of countries, sub-nationals and organisations signing up to slightly different commitments.
The big announcement of the day was the Global Coal to Clean Power Transition statement, with over 20 national Governments, including UK, recognising that coal power generation is the single biggest cause of global temperature increases. It includes commitments to rapidly scale-up deployment of clean power technologies, transition away from coal power generation and cease issuance of new permits, construction and direct government support for coal-fired power generation.
A decarbonised grid impacts every business, the potential scale of impact is huge. Over 25 organisations also signed on to this statement, including big players in the power sector such as National Grid, EDF and SSE. These businesses are seizing the opportunities associated with being early adopters. However, there is a risk that many other businesses will see this pledge and think ‘the grid will decarbonise anyway, lets just wait’. National commitments are one thing, but placing the success of your own climate targets solely on the government-led follow through would be a mistake.
The headlines are shouting that this is a global pledge to end coal by 2030. But that’s not actually what it says. The phrasing gives countries a big ‘get out of jail free’ card. The transition date is woolly – in the 2030’s for major economies (2040’s globally) and caveats with ‘or as soon as possible thereafter’. It’s also worth noting that the commitments refer only to new ‘unabated’ coal power generation, effectively saying that so long as you have some form of abatement (usually carbon capture and storage (CCS) technology) then you’re free to go. CCS technologies are still controversial in terms of their effectiveness and are not widely available at scale. Finally, the big players in coal haven’t signed up. The USA, China, Japan and Australia are conspicuously missing, limiting the real global impact this will have.
This isn’t a legally binding commitment. It doesn’t set firm deadlines. And the big players aren’t covered. All in all, it is great that coal is in the spotlight, but until we see the action plans to back it up these are just impressive headlines with little substance.
There are four products that together account for over 40% of global electricity demand: industrial motor systems, air conditioners, refrigerators and lighting. The IEA and UK launched this initiative setting countries on the path to double the efficiency of these products by 2030. There is a focus on stimulating innovation, reducing refrigerant use and bringing affordable and cost-effective products to market. Yesterday four more countries signed on, bringing the total to 14. They cover key technology hubs in India, Japan and South Korea, alongside large consumer markets of UK and Australia. China and the USA are notably absent.
All businesses will be impacted. However, the biggest opportunities lie with the producers of these types of products and the heavy industry businesses that rely on their large-scale deployment. For these businesses, energy is often the largest operational cost outside of salaries, making this initiative appealing on financial grounds as well as climate. Asset managers in particular should take note. These products tend to have long life spans and so their replacement must be well managed.
The action and ambition are clear. If this translates into government policies on energy efficiency, such as minimum standards for products, it should trigger a raft of innovation in the private sector. New sales opportunities for producers and lower costs and climate impact for users. It is a win-win situation.
Launched by the World Economic Forum and the US Envoy for Climate, John Kerry, the coalition focuses directly on businesses, aiming to support the development and scale-up of low carbon technologies in hard-to-abate sectors. The 29 founding members include A.P. Møller–Mærsk, Apple, Vattenfall and Volvo Group. As major global businesses, the coalition can leverage their collective buying power to spur innovation within the carbon intensive sectors of their supply chains. An interesting addition is the focus on direct air capture, which many businesses are relying on in their net zero strategies.
The coalition specifically pulls out eight hard-to-abate sectors, including aviation, chemicals, cement and steel. If your business operates in one of those eight spaces then it will impact you. The commitment is clear: customers want low carbon solutions, and it won’t be long before you start getting asked questions. However, the language of the statements focuses on collaboration, networks and partnerships rather than demands and punishment. This includes connecting investors to suppliers with the capability to conduct demonstration projects. As a business run coalition, it is likely that the pace of change will be greater than government-led initiatives, so businesses should get ready.
This commitment is about investing in this decade to ensure that the innovative green technologies we need are available for massive scale up by 2030. If this can be achieved, then it does put us on a glide path to keep emissions below 1.5 degrees. We know that a shift in demand drives innovation and changes in the supply chain, and there is enough buying power behind this coalition to really make that difference. It feels like one of the most immediately impactful commitments to come out of the day.
Lots of talk about coal and energy efficiency and great moves by industry. But it is important not to overlook some of the smaller outcomes from the day. Decarbonising heat is going to be a big challenge, and it doesn’t get nearly enough focus at these big events. There were two new Green Hydrogen Alliances announced, for Africa and Latin America. Although early stage, focusing on strategy, regulation and financing, it should be celebrated that green hydrogen is now getting global attention. This is going to be the next big challenge.
more than a word.