Page 6 - LatAmOil Week 48 2021

LatAmOil COMMENTARY LatAmOil

1.5°C goal remains elusive

Acasta Risk shares views on the results achieved by November’s COP26 conference in Glasgow

THE outcome of COP26 is mixed, which is emitters such as Russia, China, and India did
inevitable for a conference that seeks to cater not join the pledge, although China agreed to
WHAT: to the wishes and expectations of almost 200 discuss mitigation of methane with the US in the
The outcome of the countries. first half of 2022.
COP26 conference has Our view is an optimistic one, as it has
been mixed. become clear that net zero is our common global Deforestation
goal on climate action covering some eighty- Deforestation gained centre stage in the first
WHY: nine percent of global GDP. Furthermore, week with 141 countries committing “to halt
Catering to the wishes during the course of the two weeks, strong and and reverse forest loss and land degradation by
and expectations of substantial financial commitments have been 2030” covering some 91% of forests globally.
nearly 200 countries is a made to facilitate the transition. Importantly, key countries such as Brazil
difficult task.
and Indonesia signed the agreement. However,
WHAT NEXT: Glasgow Climate Pact Indonesia’s environment minister has since
Strong and substantial fi- The outcome of COP26, the Glasgow Climate criticised the terms of the agreement, calling
nancial commitments are Pact, is remarkably the first UN climate decision them “inappropriate and unfair”. Despite this,
being made to facilitate that includes an explicit mention of fossil fuels, the declaration is supported by private funding,
the energy transition. calling for an accelerated “phase-down” of una- with the CEOs of more than 30 financial institu-
bated coal-fired power generation and phase- tions announcing their intention to divest from
out of inefficient fossil fuel subsidies. activities within their portfolios associated with
Previous drafts of the agreement called for a deforestation.
phase-out of unabated coal-fired power genera-
tion. However, a late intervention, purportedly Phasing down fossil fuels
from India and China, weakened the language Whilst for many there was disappointment at
of the text. the last-minute change of phrase from phasing
The agreement makes progress on adapta- “out” to “down” in the final pact, prior to the
tion finance, urging developed countries to at conference the UK announced 190 countries
least double the amount of climate finance going and organisations committing to phase out
specifically to adaptation by 2025 based on 2019 coal, including Poland, Vietnam, Egypt, Chile
levels. Nevertheless, the text acknowledges with and Morocco.
“deep regret” that the goal of providing $100bn During the conference, the formation of
a year to developing countries for mitigation the Beyond Oil and Gas Alliance (BOGA) was
measures has not been met. announced, a coalition of national and sub
In terms of nationally determined contri- national governments which aims to “set an end
butions (NDCs), as they stand current pledges date for their oil and gas exploration and extrac-
are insufficient to limit warming to 1.5 °C. As tion and curtail new licensing”. At formation
a result, the pact requests that countries “revisit there are 11 members, including Costa Rica,
and strengthen” their 2030 targets by the end of Denmark, France, Greenland, Ireland, Quebec,
2022, similar to the ratchet mechanism built into Sweden and Wales as core members, with Cal-
the Paris agreement, although it remains to be ifornia, New Zealand and Portugal as associate
seen if countries will meet this expectation, as members.
some forty countries did not update their NDCs Crucially, Nicola Sturgeon confirmed Scot-
before COP26. land was in talks with BOGA to join at some
Outside the final text, there were a number level, a critically important development given
of important announcements. the prominence of the oil & gas sector in the
Scottish independence referendum debate, and
Methane the raging arguments that continue over the fate
The Global Methane Pledge was signed by over of the Cambo field development in water West
one hundred countries responsible for close to of Shetland.
half of global anthropogenic methane emis- Furthermore, over 30 countries and finan-
sions, leaving aside valid concerns over how this cial institutions committed to halt financing
will be implemented and enforced, as it does not unabated fossil fuel development overseas by
indicate what level of reductions countries will the end of 2022, albeit with significant caveats,
commit individually. In fact, the initiative aims as they recognise that there will be limitations
to reduce global methane emissions by at least regarding alignment with 1.5 degrees of warm-
thirty percent from 2020 levels by 2030. ing. It remains to be seen how this will be put
Disappointingly, several major methane into practice.

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