COP26 summit was disappointing. Expectations were high and there was one keyword in mind: Acceleration (of the ambitions to reduce greenhouse gas emissions). But this acceleration is essentially being pushed and demanded by the most developed countries, many of which have not yet reached the targets of the Paris Agreement. They have reached their peak emissions though. For developing countries, it is a different story.

Global carbon emissions – net zero race: a common effort

Source: BoFA, 12.10.2021

Emerging economies were the ones making a major declaration during the summit: India (finally) pronounced itself on carbon neutrality in 2070, 10 years after its Chinese neighbor and 20 years after the European Union. While many consider this deadline unacceptable in view of the climate emergency, it is likely that India can hardly commit to any other target earlier, given its dependence on coal. Two thirds of coal consumption are carried out by India and China, the latter having already defined a major exit plan that attempts to maintain a certain balance for regions of the country that are mainly dependent on this sector of economic activity.

Emerging economies have been asking for financial support to enable them to commit to ambitious climate targets and carbon emission reductions for a while. The principle of “a fair transition”. However, today, the promises have hardly been fulfilled. Indeed, the implementation plan for climate finance is probably the biggest disappointment of the conference, especially for emerging economies. Several experts have described COP 26 as a conference of rich countries for rich countries.

In 2009, at COP15 in Copenhagen, it was agreed to provide emerging countries with $100 bn a year to finance the transition, both to reduce emissions and adopt adaptation mechanisms. So far, only $82-83 bn has been disbursed. However, the amount to be paid each year between 2020-2025 have been agreed, including a phased-in financing plan: by 2023 the $100 bn will be paid and with a catch-up of the amounts still due.

Nonetheless, nothing has been planned or agreed for the period after 2025; this will have to be put back on the negotiating table at COP27 in Egypt and beyond. On the reduction of greenhouse gas emissions, the aid is essentially in the form of loans that can be recovered after the improvements made and the other costs linked to the reduction of emissions. However, for adaptation to climate change, it was planned to be delivered mainly in the form of grants. Finally, it will be mainly in the form of loans, from which the countries will not be able to recover the money.

Last, the issue of loss and damage. Since no financing mechanism was defined on this point and developing countries, generally the most exposed to climate change but not necessarily the most contributing ones, were neglected. These losses and damages are relatively immaterial today and therefore not measurable or measured.

With almost the entire globe committed to carbon neutrality by 2050-2070, the energy transition has a definite cost that is accompanied by increased geopolitical tensions. Today, we are already witnessing the race between the United States and China for leadership on the environmental issue. However, all countries must agree on aggressive decarbonization to respect the global budget for 2030 (40% reduction in emissions compared to 2010 levels). Unfortunately, it is not the possibility of buying pollution permits between the worst and the best performers that will make feasible to reduce the global level of emissions. Such trading is likely to exacerbate tensions over the transition. Climate change is also the primary reason for the migration of several populations, which will also exacerbate demographic tensions. These are issues that we must continue to monitor via the various criteria and factors of our model, both in the environmental and social dimensions.






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