Searching for a Climate Solution (Part 1): A Short Primer on the Stakes and Prospects for Glasgow

Don Kanak, Chairman of Prudential Insurance Growth Markets, has been engaged in environmental protection and climate change starting from his first job at the United States Environmental Protection Agency in the 1970s. During his extensive career in insurance and investments, Don has chaired the WWF’s Global Forest and Climate Initiative, served as a member on the United Nations Global Environment Facility’s Technical Advisory Group on its 2014-2018 climate change mitigation strategy, and participated in climate meetings alongside Copenhagen (COP 15, 2009) and Doha (COP 18, 2012).

As we approach what would have been the scheduled date of COP 26 in Glasgow, we asked Don to share his thoughts on the importance of the climate change negotiations, historical challenges, and prospects for Glasgow in this two-part series.

Introducing the challenge

When the Paris Agreement was announced at the 21st Convention of the Parties (COP 21) in 2015, the world celebrated its first binding global agreement. Reaching this milestone took almost 25 years of negotiation amongst developed and developing countries (see Insert 1 – a brief history climate change). However, five years on, greenhouse gas (GHGs) concentrations continue to rise. Without commitments in Glasgow for deeper and faster reduction, the world still faces climate disaster.

Before the Paris Agreement, scientific consensus was that to keep global warming within 2°C by 2100, atmospheric concentration of GHGs must not exceed 450 parts per million (ppm) of CO2e1 . The world reached 454 ppm CO2e in 20042 and has since exceeded that level. (Fig. 1) In fact, CO2 concentrations, which are the largest contributor to GHGs, are now are at the highest level in over 800,000 years3.

Fig 1: GHG concentration since 1700

Fig.1

As the world already overshot the 450ppm CO2e threshold, in order to stay within the 2°C warming “carbon budget4", annual global GHG emissions need to drop from 55 gigatons of carbon dioxide equivalent (Gt CO2e) in 2018 to 41 Gt CO2e by 2030 and zero by 21005. Getting a global agreement to achieve those radical reductions depends on the success of COP 26 in Glasgow scheduled for November 2021.

Why is it important that we stay within 2°C warming?

Although the differences may seem small between 1.5°C and 2°C warming by 2100, it poses significant risks to nature as well as human life, health, economic growth, and geopolitical stability. Fig.2 illustrates how if warming exceeds 2°C, the impact on various areas dramatically worsens.

Fig 2: A few examples of impacts of 1.5°C and 2°C warming

Fig.1

The scientific foundation behind climate change is not recent. In the late 1800s, Swedish chemist Svante Arrhenius predicted that climate change would occur due to changes in physical chemistry in the earth’s atmosphere. He calculated that cutting CO2 in half would produce an ice age, whilst doubling it would warm the planet by 5-6°C6. Despite Arrhenius’ observation it took almost a century of increasing emissions for the world to forge the United Nations Framework Convention on Climate Change (UNFCCC) in 1992 to agree to work toward controlling emissions and limiting global warming.

Under the framework of the UNFCCC, over the next 20 years, climate scientists (the IPCC), thousands of national and international public sector leaders, and a host of private sector and civil society stakeholders gathered at COPs and a host of related meetings attempting to create a global architecture to rein in GHGs whilst preserving growth. The Kyoto Protocol reached in 1997 was a milestone. It only required specific actions amongst 37 countries and the European Union, however, and it ultimately failed to deliver the expected results. The Paris Agreement at COP 21 marked the first time virtually all developed and developing countries agreed to binding commitments aimed to limit average global warming to 2°C whilst pursuing efforts to limit warming to 1.5°C7.

How did the negotiators at COP 21 achieve a binding agreement that had eluded their predecessors for 20 years? Fundamentally, they were successful because they resolved the previously intractable “Iron Triangle” of climate change negotiations.

Bridging the Gaps: The “Iron Triangle” of Ambition, Equity, and Capacity

From the early COPs in the 1990s including the Kyoto Protocol (COP 3, 1997), through the nearly successful effort in Copenhagen (COP 15, 2009), negotiators struggled with the same major issues. Those can be summarised along three dimensions of an “Iron Triangle”: Ambition-Equity-Capacity.

Fig 3: The “Iron Triangle” of climate change negotiations

Fig.1
  • Ambition: Both developed and developing countries have to make ambitious efforts to reduce emissions. In 1990, almost 80% GHG emissions were from the developed world8, but almost 90% of growth between 2000 and 2018 has been from the developing countries9.

  • Equity: What is a fair way to share the burden? Specifically, a) How do we allocate reductions across countries? (transnational equity); and b) How to allocate and reduce unequal burdens on populations, providing a “just transition” for groups that will be disproportionately affected?

    Transnational equity has always been a contentious issue between developed and developing countries. What is the “fair” basis to decide emission reduction targets depends on one’s perspective (Fig. 4). If this is done by current annual emissions, then China would need to cut the most. If this is done by current annual emissions per capita, then high carbon developed countries such as the US, Russia or Australia would have to cut the most. If by historical per capita emissions, then Europe and North America should bear the heaviest burden. Developing countries have much lower current and historical emissions per capita and thus believe it is unfair to be asked to bear extra burden to solve a problem that the developed countries (mostly Europe and North America) created in the past 150 years, especially if cutting emissions will impose growth constraints and prevent millions from escaping poverty.

  • Capacity: Do we have the means to cut? Many developing countries lack the experience, technology, and finance to develop less carbon intensive energy systems and business models at the pace required to meet the 2°C target. Thus, mechanisms to transfer funds and technology are critical to any climate agreement.

Fig 4: What is a fair way to allocate carbon budgets?

Fig.1

COP 21 was able to solve the “Iron Triangle” and forge an agreement by balancing all three factors ¬– Ambition, Equity, and Capacity. Countries were empowered to establish their own “Nationally Determined Contributions” (NDCs) appropriate to their circumstance including their stage of national development (Fig.5).

Fig 5: Example Nationally Determined Contributions from various countries10

Fig.1

In addition, to improve Equity and increase the Capacity of developing countries, developed countries agreed to provide $100 billion annually starting in 2020 to finance climate change mitigation initiatives11.

Paris was great, but it wasn’t enough

Achieving the NDCs agreed at Paris will not keep warming below 2°C. Best estimates indicate that even if all of the current NDCs are achieved, the planet will still warm by 2.4 - 2.7°C (Fig. 6). At Paris, leaders recognised this shortfall and agreed to reconvene at COP 26 (Glasgow, 2021) to assess progress, increase the ambition to achieve the 2°C, and, if possible, get closer to 1.5°C.

Fig. 6: Global greenhouse gas emissions and warming scenarios

Fig.1

The consequences of delay — radically steeper reductions

In the 1990s when the Kyoto Protocol was negotiated, the scientific consensus was that the world could stay within 2°C warming by reducing GHG emissions by 0.5% annually until 2100. (See purple line in Fig.6). Because Kyoto and subsequent COPs failed to rein in emissions growth, however, instead of falling by 0.5% per year, total emissions grew by about 1.5% per year from 1990 to 2018 (see black “historical emissions” line in Fig.6), pushing atmospheric concentrations of GHGs from 417 to 496 ppm12. Starting from this higher level means that COP 26 in Glasgow must achieve commitments to more drastic reductions to stay within the 2°C or 1.5°C warming targets (see green and blue areas in Fig.6).

Current best estimates indicate that to stay within 2°C warming will require annual global GHG reductions of 2.7% per year until 210013. To put that in perspective, COVID-19’s unprecedented impact on economies (especially travel, tourism, and mobility) is projected to reduce 2020’s global GHG emissions by 4.6%14. This means that we would need the equivalent of a global pandemic effect every other year to keep emissions in line. Can the world really reduce global carbon emissions in such a drastic manner – without a global pandemic’s economic damage? This is especially true when many existing business models and national strategies for energy are still reliant on fossil fuels for energy and unsustainable agricultural practices for food.

The above is not to cast gloom on the prospects for success in Glasgow at COP 26. Rather, it seeks to clearly illustrate the enormous challenge that the UK faces as Chair of COP 26 in forging an agreement to achieve the 2°C or better ambition — and how further delays will make the challenge even more daunting, if not impossible.

Upping the ambition and reaching an agreement at Glasgow will require bridging the Iron Triangle once again. If you were setting the odds based on success from the past, 1 win (Paris) in 25 COPs, one might not be optimistic. Some would argue that the crisis of COVID-19 will make success even harder to achieve due to financial stress and diversion of priorities.

Still, there is hope. In Part 2 of this series, we will explore five "winds of change" that working together could fundamentally shift the odds in favour of an ambitious agreement in Glasgow.

Fig.1

Insert 2: Glossary of climate change terminology

Cap and trade: An emission trading scheme whereby businesses or countries can buy or sell allowances to emit greenhouse gases via an exchange. The volume of allowances issued adds up to the limit, or cap, imposed by the authorities.

Carbon budget: The amount of carbon dioxide emissions permitted over a period of time to keep within a certain temperature threshold.

CBDR: Common but differentiated responsibilities and respective capabilities. A principle of international environmental law establishing that all states are responsible for addressing global environmental destruction yet not equally responsible.

CO2e: Carbon dioxide equivalent. It describes, for a given mixture and amount of greenhouse gases, the amount of CO2 that would have the same global warming ability.

COP: Conference of the Parties. The supreme decision-making body of the United Nations Framework Convention on Climate Change. It currently meets once a year to review the Convention’s progress.

ETS: Emission Trading Scheme. A scheme set up to allow the trading of emissions permits between business and/or countries as part of a cap and trade approach to limiting greenhouse gas emissions.

EUA: EU Allowance Unit. A tradable unit under the European Union Emissions Trading Scheme (EU ETS), giving the holder the right to emit one tonne of carbon dioxide equivalent gas.

GHG: Greenhouse gases. The atmospheric gases responsible for causing global warming and climate change. The major greenhouse gases are carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O). Less prevalent, but very powerful, GHGs are hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6).

Gt: Gigaton. A billion metric tonnes.

GWP: Global Warming Potential. As greenhouse gases have varying abilities to absorb heat and warm the atmosphere over a given time period, GWP equalizes their warming strength relative to carbon dioxide. For example, carbon dioxide has a GWP of 1, whilst methane has a GWP of 25 over 100 years. It is important to know the timescale, as gases are removed from the atmosphere at different rates.

IPCC: The Intergovernmental Panel on Climate Change. A scientific body established by the United Nations Environment Programme and the World Meteorological Organization in 1988. It reviews and assesses the most recent scientific, technical, and socio-economic work relevant to climate change, but does not carry out its own research.

MRV: Monitoring, reporting and verification.

NDC: Nationally Determined Contribution. Submissions by countries that have ratified the Paris Agreement which presents their national efforts to reach the Paris Agreement’s long-term temperature goal of limiting warming to well below 2°C. New or updated NDCs are to be submitted in 2020 and every five years thereafter. NDCs thus represent a country’s current ambition/ target for reducing emissions nationally.

ppm or ppmv: parts per million by volume.

UNFCCC: The United Nations Framework Convention on Climate Change. One of a series of international agreements on global environmental issues adopted at the 1992 Earth Summit in Rio de Janeiro. It aims to prevent “dangerous” human interference with the climate system.

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