The Glasgow conference was praised as a huge step forward in tackling climate change, but also drew criticism for not going far enough.
Between 31 October and 12 November 2021, Glasgow hosted the 26th annual Conference of Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC), held under the presidency of the UK. Governments, corporations, academics, social groups, and other members of civil society converged with the aim of working together at the international level to tackle climate change.
The discussions culminated in the signing of the “Glasgow Climate Pact”, a combination of pledges, commitments, and decisions made by countries that are parties to the UNFCCC and the 2015 Paris Agreement on Climate Change. The private sector, NGOs, and countries outside the context of the formal UN framework also contributed a considerable range of initiatives and pledges, in a show of commitment from actors around the globe to reduce global warming.
Having been in Glasgow and attended COP26, as well as participating in a number of the side events in the “green room”, we found it interesting to note the similarities and differences of the event to previous COPs (including COP21 in Paris) that we have attended. This blog post examines our key takeaways from being on the ground at COP26, including those contained within the Glasgow Climate Pact and those outside that framework, and considers the possible impacts of several proposals.
Glasgow Climate Pact
Target Back on 1.5
The Paris Agreement commits parties to limit the global average temperature rise to “well below 2°C” above pre-industrial levels, and to aim for 1.5°C. However, over the past number of years, scientists, academics, and other stakeholders have increasingly supported focusing on the 1.5°C target, due to the considerable differences in predicted damage to the planet under projected climate scenarios at each of these levels.
Within the Glasgow Climate Pact, countries agreed to focus on the 1.5°C target, recognising that limiting global warming to 1.5°C requires rapid, deep, and sustained reductions in global emissions, including reducing global CO2 emissions by 45% by 2030 (relative to the 2010 level). Despite the UK’s stated aim ahead of COP26 to “keep 1.5°C alive”, the reference to “well-below 2°C” was retained in the final version of the Glasgow Climate Pact, in an example of the compromise needed to achieve a consensus amongst all of the parties.
Upon signing the Glasgow Climate Pact, parties were encouraged to submit revised or updated nationally determined contributions (NDCs) as soon as possible before COP27 (which will take place in Egypt in November 2022). NDCs outline the efforts by each party to reduce national emissions and adapt to the impacts of climate change. The timeframe for updated NDCs is shorter than envisioned under the Paris Agreement, which contemplated a new/updated NDC every five years. Parties were also requested to strengthen the 2030 targets in their NDCs by the end of 2022, taking into account different national circumstances.
Phasedown of Coal
One of the more controversial aspects of the latter days of COP26 was the change in wording in relation to coal between the draft and final version of the pact. The final document asks countries to “accelerate efforts towards phasing down unabated coal power” (referring to coal power that operates without carbon capture and storage technology), whereas the draft issued by the UK earlier during COP26 used the expression “phase out”.
Despite this change, which caused disappointment amongst campaigners and certain politicians, the Glasgow Climate Pact is notable for being the first COP decision to specifically mention a fossil fuel by name.
Loss and Damage
Developing countries that have already begun to suffer the negative impacts of climate change are to begin a “dialogue” in relation to funding the Santiago Network, a UN body that was established in 2019 to address damage caused by climate change. The Santiago Network will help provide “technical support” to assist in avoiding and addressing the consequences of climate change. Despite requests from certain countries, a separate fund to compensate developing countries impacted by the effects of climate change was not agreed.
Adaptation and Mitigation Finance
A topic of discussion amongst negotiators and the media on many occasions at COP26, the Glasgow Climate Pact noted that developed countries had missed their 2020 target of providing US$100 billion a year in climate finance to help developing countries. However, developed countries re-entered that commitment for the next five years. Their compliance will likely be closely monitored ahead of COP27, given how much publicity the issue received in Glasgow.
Developed nations were also asked to “at least double” their support for climate change adaptation (as opposed to climate change mitigation) actions by 2025 relative to 2019 levels.
COP26 finally led to agreement on the rules of the international carbon markets under Article 6 of the Paris Agreement, six years after that agreement was signed. The rules are likely to become ever more important as countries and companies aim to cut their emissions to net zero, and are likely to lead to increased interest in carbon offsetting schemes such as planting forests. Key decisions on Article 6 include the following:
- Confirmation (as expected by all) that corresponding adjustments are required to be made to the national determined contributions of countries when Emission Reductions issued pursuant to Article 6(4) of the Paris Agreement (A6.4ER) are sold to another country. This rule avoids double-counting of reductions in greenhouse gas emissions.
- Certified Emission Reductions issued in 2013-2020 by the Kyoto Protocol’s Clean Development Mechanism may be used to meet a country’s first NDCs.
- The share of proceeds for A6.4ER transactions has been set at 5%.
- 2% of all A6.4ER issued will be retired automatically to create net reductions in greenhouse gas emissions.
Beyond the Glasgow Climate Pact
Global Methane Pledge
Outside the framework of the Glasgow Climate Pact, the US, the EU, and a number of other countries launched the Global Methane Pledge, committing to a 30% reduction in methane emissions by 2030 (from 2020 levels). More than 100 countries have now signed the pledge, which aims to limit the particularly potent greenhouse gas. Some of the world’s key methane emitters (including China, Russia, and Australia) did not commit to the pledge, which may limit its influence in impacting short-term methane emissions.
Pledge to Phase Out Coal
Alongside the commitment in the Glasgow Climate Pact to phase down coal (discussed above), 190 countries committed to transition away from unabated coal power generation by signing the Global Coal to Clean Power Transition Statement on 4 November 2021. The statement requires signatories to, amongst other things, (i) rapidly scale up clean power generation and energy efficiency measures, (ii) stop issuing permits and providing government support for new unabated coal-fired power generation projects, and (iii) scale up technologies and policies during the 2020s to achieve a transition away from unabated coal power generation in the 2030s (or as soon as possible thereafter) for major economies, and in the 2040s (or as soon as possible thereafter) globally.
Activists have cast doubt over the influence of the Global Coal to Clean Power Transition Statement, given the flexibility of the timelines involved and the fact that some countries qualified their pledges to avoid committing to all of the matters raised above.
International Sustainability Standards Board
As discussed in this Latham blog post, the International Financial Reporting Standards (IFRS) Foundation launched the International Sustainability Standards Board (ISSB). The ISSB intends to issue globally recognised environmental, social, and governance (ESG) reporting standards for companies in 2022, which will assist with the current fragmentation of a market that is seeing rapidly increasing demand.
Initial reaction to COP26 has been mixed. Patricia Espinosa, Chief Secretary of the UNFCCC, described the results of COP26 as a “huge step forward” in ending reliance on coal and recognised the achievements of the parties in relation to climate adaptation funding. And US climate envoy John Kerry described the Glasgow Climate Pact as a “powerful statement” and stated that the US will take the lead in relation to certain controversial topics, such as loss and damage.
On the other hand, climate activists have criticised the results of COP26 for not going far enough, and pointed to the lack of action in relation to a loss and damage fund as evidence that developed countries were not willing to commit the required financial resources to combatting climate change.
The nature of multilateral negotiations such as those undertaken at COP26 means reaching a compromise that suited all stakeholders was always going to be challenging. Whilst many key topics were advanced in Glasgow, climate change will clearly continue to be a major topic for governments, companies, and the rest of the population.
Latham & Watkins will continue to monitor developments in this area ahead of COP27.
 Section 71, Decision -/CMA.3 Rules, Modalities and Procedures for the Mechanism Established by Article 6, Paragraph 4, of the Paris Agreement, https://unfccc.int/sites/default/files/resource/cma3_auv_12b_PA_6.4.pdf
 Section 75, Idem.
 Section 67(a), Idem.
 Section 59, Idem.