We recently blogged about the outcomes of COP26, however with the New Year here we wanted to revisit this topic and take a look at what has evolved recently and where we are heading. The necessity of a global approach in tackling the climate crisis is all around us and this was one of the main topics discussed amongst world leaders in Glasgow for COP26 and pledges were made to address the climate crisis.
So what if any progress has been made since COP26 and what can we expect to evolve this year? Businesses and individuals are all eager to discover what new mandates and compliance scenarios are on the forefront that will undoubtedly impact them. To be honest, we haven’t seen much information published since the event, but we have seen some information, mostly out of the UK at this point. There will definitely be interesting and continued developments this year but there are three notable initiatives to focus on now.
According to WTW, a global advisory, broking and solutions company out of the UK, “The accelerating growth of the renewable energy sector continues as companies are looking to transition to a low carbon environment. The speed of growth is also creating significant demand for building resilience against climate change.”
In their recent report they cite the need for renewable energy companies to create climate transition plans to build their own resilience to their enhanced climate risk. Saying this is especially relevant at a time when the global financial system, including private investors, regulators and central banks, have started to acknowledge their role in aligning capital flows with the climate transition. Renewable energy companies will need to act fast to develop plans to ensure that these external stakeholders continue to support their organization. Despite
their apparent green credentials, it’s clear that renewable energy companies will be by no means exempt from what will be required by law across the globe in the months and years ahead.
S&P recently reported on COP26 pledges to drive continued focus on methane emissions for the gas sector saying the challenge will turn to implementation efforts by countries and companies which will have implications for the U.S. natural gas sector.
The chances of a U.S. fee on methane emissions recently plummeted with an impasse on budget reconciliation legislation, but concrete action on methane emissions is still expected through various regulations. In the U.S., the Environmental Defense Fund (EDF) is urging the EPA to strengthen controls on routine flaring and address leaking abandoned wells, as the agency mulls a supplement in March to its proposed regulations.
EQT CEO Toby Rice argued the consensus emerging at COP26 over turning away from coal for power generation creates a major opportunity for United States gas saying, “If you want to phase out coal, U.S. natural gas in the form of LNG exports is the biggest green initiative on the planet, and it’s not even close,” and he predicted that in 2022 “you’re going to see this industry make a tremendous impact on communicating and also performing as it relates to methane emissions.”
In one development that has concerned the U.S. gas sector, the U.S. joined a side deal with 40 other countries opposing new public international finance of unabated fossil fuel projects. In 2022, industry and environmental stakeholders will be closely monitoring whether the U.S. in practice will make exceptions for gas infrastructure in markets with large growth potential.
At COP26 there were commitments to accelerate efforts towards the phase-down of unabated coal power. It is not as simple as some think as this will require practical steps towards phasing out coal power generation, ending the construction of new coal power plants, and ceasing public support for fossil finance.
E3G in the UK published recently outlining six coal-to-clean priorities to build momentum in 2022 from the outcomes at Glasgow:
- Ensure coal and fossil finance commitments at COP26 are formally tracked to hold signatories accountable.
- Ratchet up diplomatic pressure on fossil finance, particularly towards Japan, South Korea, China and the Multilateral Development Banks (MDBs).
- Encourage the remaining ~30 countries still considering new coal power plants to instead make ‘No New Coal’ commitments.
- Deliver on the promise of the South Africa Just Energy Transition Partnership (JETP), with the U.S., Germany, France and EU.
- Engage the U.S. to ensure its Build Back Better World (B3W) and New Zero World initiatives prioritize energy infrastructure.
- Ensure coal phase out remains central to multilateral climate discussions in 2022, including the pathway to a just transition.
According to E3G, consigning coal to history is the compelling core of keeping 1.5°C alive.
Needless to say, many around the globe are still sorting out their next steps needed to begin work around the many initiatives agreed upon at COP26. There is a lot of work to be done and surely everyone will see increased focus and resources devoted to these efforts in the coming months. Many companies and industries are preparing for changes that will no doubt occur as new initiatives are implemented surrounding compliance requirements and mandates.
Weather Source is dedicated to bringing awareness to our clients and followers by delivering important information on the evolving “sustainability” landscape and will continue to report on new developments. This is exactly why we formed our Climate Risk Enterprise Group with our parent Pelmorex Corp/The Weather Network, to support businesses as they begin to develop strategies to combat climate and physical risk and ensure compliance with new and evolving mandates. Weather Source will provide critical climate risk intelligence to help businesses and organizations by delivering the tools and data they need to be successful with mandates, compliance targets, stress-testing as well as identifying new opportunities.
Stay tuned as we are just getting started! If you have questions on how we can help prepare your business, reach out to our team at firstname.lastname@example.org.