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COP26: Energy Day, 4 November 2021

  • Global
  • ESG
  • ESG - Sustainable Finance
  • Financial services and markets regulation - ESG
  • Energy and infrastructure

05-11-2021

Thursday’s events at COP26 saw ministers and non-state actors coming together to announce ambitious progress in the coal to clean power transition.

Energy

Key announcements and pledges:

  • End of coal in sight at COP26

    COP26 president Alok Sharma has vowed to “consign coal to history”, as the single biggest contributor to climate change.

    The pledge is known as the ‘Global Coal to Clean Power Transition Statement’ (the ‘Statement’).

    A 190-strong coalition, called the “Powering Past Coal Alliance”, has agreed to phase out coal power and end support for new coal power plants both domestically and internationally. The coalition is made up of more than 160 countries, sub-nationals and businesses.

    The Statement commits nations to:

    • end all investment in new coal power generation domestically and internationally
    • scale up deployment of clean power generation
    • phase out coal power by 2030s (developed countries) and by 2040s (developing countries) or ‘as soon as possible thereafter’
    • make a transition away from coal power in such a way that benefits workers and communities. 

    The UK has committed to phasing out coal power completely by 2024, which involves decommissioning the two existing coal power plants in the UK. 

    Further at least 23 countries made new commitments to phase out coal power or stop investing in new coal-fired plants domestically and internationally, including Indonesia, Vietnam, Poland, South Korea, Egypt, Spain, Nepal, Singapore, Chile and Ukraine. However, certain major coal-using countries did not sign up to the pledge, including Australia, India, China and the US.

    However, none of these commitments are binding and there is an argument that this flagship global agreement is undermined by the US refusing to sign up and the weakening of the text to allow another decade, or even longer, to phase out coal by the addition of ‘or as soon as possible thereafter’ after the pledge to phase out the use of coal power.

  • COP26 sees UK businesses lead the world in climate change commitments

    60 of the FTSE 100 companies have joined the UK ‘Race to Zero’ and are committed to eliminating their contribution to carbon emissions by 2050.

    This represents a total market capital of over £1.2 trillion and combined annual turnover of £700 billion.

    The commitments build on the Net Zero Strategy that was recently published by the UK government. The Net Zero Strategy outlines measures to transition to a green and sustainable future, helping businesses and consumers to move to clean power, supporting hundreds of thousands of well-paid jobs and leveraging up to £90 billion of private investment by 2030.

    The UK Government is calling on businesses, of all sizes, to pledge to go One Step Greener and sign up to the globally-recognised UN Race to Zero Climate Commitment.

  • UK Government and International Energy Agency (‘IEA’) lead largest ever global initiative to make products more energy efficient

    The UK Government and IEA jointly lead the COP26 Product Efficiency Call to Action which is an initiative to double the efficiency of key internationally traded products by 2030 in order to help drive reductions in global greenhouse gas emissions and consumers’ energy bills.

    The Call to Action encourages governments to deploy a range of policies such as product standards, labels and incentives to raise the efficiency of high-energy consuming products with a focus on four key products – lighting, refrigerators, air conditioners and industrial motor systems.

    As of today, four major economies – Australia, Indonesia, Japan and Nigeria – have signed onto the mission, bringing the total to 14 and making it the largest ever global initiative of its kind.

  • European unions propose including nuclear energy within clean energy remit

    European unions from across Europe have pressed world leaders to factor in nuclear power as they discuss how to accelerate the path to net zero emissions.

    Today’s letter was signed by figures including Gary Smith, general secretary of Britain’s GMB union, Helene Lopez, secretary-general of CFE-CGC Energies in France, and Bob Walker, national director of the Canadian Nuclear Workers’ Council – as well as counterparts in Belgium, Czech Republic, Hungary, Slovakia and Romania.

    They urged political leaders to take the “courageous” move of committing to new nuclear fleets around the world.

  • US-UK Strategic Energy Dialogue launch: partnering to accelerate global clean energy transition at COP26

    Kwasi Kwarteng (UK Business and Energy Secretary) and Jennifer M. Granholm (US Secretary of Energy) held a meeting today [Thursday 4 November] to discuss strengthening cooperation to accelerate the global transition to clean energy.

    The meeting marked the launch of the ‘US-UK Strategic Energy Dialogue’ which is a commitment made by Boris Johnson and Joe Biden in June 2021.

    The ‘US-UK Strategic Energy Dialogue’ aims to deepen collaboration in areas such as clean energy technologies, industrial decarbonisation, nuclear energy, and energy security, as well as science and innovation.

    The next ‘Strategic Energy Dialogue’ ministerial meeting will be held in Spring 2022.

  • India has now announced net zero emissions target

    Indian Prime Minister Narendra Modi outlined a net zero emissions target by 2070 for India.

  • The Prague Climate Coalition release a joint statement

    The Prague Climate Coalition which consists of Heads of Diplomatic Missions issued a joint statement during COP26.

    The Czech Republic is a member of the EU which aims to achieve carbon neutrality by 2050.

    The purpose of the joint statement was to express commitment to obtaining carbon neutrality by working closely with the Czech government and parliament, civil society and other stakeholders.

    The joint statement was commissioned by:

    • British Embassy
    • Embassy of Canada
    • Embassy of Egypt
    • Embassy of Finland
    • Embassy of Ireland
    • Embassy of Italy
    • Embassy of Sweden
    • Embassy of the Kingdom of the Netherlands
    • Embassy of the Republic of Korea
    • Embassy of the Republic of Slovenia
    • Germany Embassy
    • Royal Danish Embassy
    • Royal Norwegian Embassy

Finance

Key announcements and pledges:

  • Further update on Finance Day pledge to end international financing of unabated fossil fuel

    As of this morning, at least 25 countries, now including COP26 partner Italy, and public finance institutions have committed to ending international public support for the unabated fossil fuel energy sector (coal, oil and gas) by the end of 2022 and instead prioritising support for the clean energy transition.

    Together, this could move an estimated $17.8 billion (£13.2 billion) a year in public support out of fossil fuels and into the clean energy transition. However, the pledge does have loopholes that would still allow for certain fossil fuel investments, for example gas power plants with carbon capture and storage technology.

    This is the first time a COP presidency has prioritised this issue and set a bold end date on international fossil fuel finance. This sends a clear message to private investors to follow suit.

    China, Japan and South Korea have yet to sign on to stop international finance for all fossil fuels.

  • South Africa receives backing of £6.2 billion from UK, Germany and US for ‘Just Energy Transition Partnership’

    South Africa has announced a ‘Just Energy Transition Partnership’ worth $8.5 billion to accelerate a just transition from coal to clean power. The UK, Germany and the US have stepped up to pay the $8.5 billion (£6.2 billion) to assist South Africa with moving away from coal.

  • Are auditors key to the green transition?

    Companies are under pressure to come clean on carbon emissions, however the framework for measuring this is still undetermined. This may mean that the onus is now on auditors to make judgement calls about ‘green’ matters to a new unexpected level.

Nature

Key announcements and pledges:

  • Indonesian minister called agreement to reduce deforestation “inappropriate and unfair”
  • Over 100 world leaders pledged their commitment to reducing deforestation. Indonesia being one of the signatories.

    Siti Nurbaya Bakar, environment minister for Indonesia, said she did not support the agreement signed only two days ago by her government.

    She says her government prefers domestic goals and should not be expected to halt development in the country, such as road work as a consequence of this agreement.  

    Other interesting discussions include:

  • Pensions: Diversifying pension investment

    There is potential for pension schemes to capitalise on investment opportunities that have a positive impact and drive the transition to a net-zero economy while making a financial return.

  • Real estate: Commercial Buildings

    Investments required to decarbonise commercial buildings and make real estate a resilient asset.

Stephen Hill comments: "The announcement yesterday that 60 of the FTSE 100 companies have committed to eliminating their contribution to carbon emissions by 2050 is both heartening and worrying: heartening that the majority of the UK’s major corporates have made that express commitment; but worrying that not all felt able to do this. At a time when ‘green-washing’ and the ability to verify reduction in carbon emissions is a constant topic, we need all companies to commit to this, and within a timescale that can make a meaningful difference. It is also enlightening to see that these companies are putting people at the forefront of this – an often forgotten impact of climate reduction is the level of job creation and re-skilling that will flow through from these commitments, all of which will be welcome within the marketplace."