COP26: Who Pays? 

More than 100,000 climate-action activists from across the world gathered in Glasgow Saturday to protest the agreements and promises made so far at the COP26 climate talks.

According to protesters, the new pledges made during the summit — to cut carbon and methane emissions, end deforestation, phase out coal and provide more financing for poorer countries most vulnerable to extreme weather — are just “eye candy,” falling far short of what’s needed to curb global warming. 

 

Teenage activist Greta Thunberg has described the two-week summit as more “blah blah blah” and called it a “failure.” She told clamorous youth protesters outside the venue that the conference has turned into “a global North Greenwash Festival.”  

Others worry, though, that in the rush to make climate-action pledges, Western governments may be going too fast with decarbonizing and risk losing the support of their own populations by failing to take into account the economic impact of the monumental shifts being envisaged.

Opinion polls suggest that across the globe, overwhelming majorities of people see climate change as an emergency requiring dramatic action. But some polls in recent weeks have also suggested that when people are told what the costs might be for them to help curb global warming, they are reluctant to shoulder the financial burden.

A survey in Britain published Sunday suggested that less than half of the British population are willing to pay thousands of pounds to make their homes greener to help meet net-zero emission goals outlined by Prime Minister Boris Johnson.

Those polled were asked their opinions on green policies to slash emissions before and after hearing about the estimated upfront costs to insulate their homes and switch from natural gas boilers for heating to heat pumps. In the survey conducted for British think tank Onward by pollster J.L. Partners, 50% backed the idea of better insulation for homes, double glazing and switching to heat pumps. But when they were provided with the estimated cost of $11,000 per household, support trailed away, with just 26% agreeing.

“Millions of voters, broadly supportive of the ‘cleaner earth’ agenda, are wondering how much of the burden of transitioning to a low-carbon, low-emission economy will fall on them, when they’re already struggling to make ends meet,” economist and newspaper columnist Liam Halligan wrote Monday in The Telegraph. 

How to green the planet and fund the transition away from fossil fuel dependency to renewable, sustainable energy, and how to finance projects to make countries more resilient to extreme weather, have been key themes at the summit. The discussion of costs and how to share them between governments (via taxation), consumers, households and the private sector have also been featured.

Last week, major banks, investors and insurers pledged trillions in green funding in a coordinated commitment to incorporate carbon emissions into their investment and lending decisions.

The United Nations’ Glasgow Financial Alliance for Net Zero, made up of more than 450 financial institutions across 45 countries and managing assets valued at $130 trillion, have committed to its program to cut carbon emissions and fund investments needed for new greener technologies.

Unveiled last week by U.N. climate envoy Mark Carney, the funding can take the form of bank loans and investments by venture capitalists, private-equity firms, mutual funds, endowments and other big investors that buy stocks and bonds. They would still earn profits while shifting funds toward investments that help reduce carbon emissions.

“These seemingly arcane but essential changes to the plumbing of finance can move and are moving climate changes from the fringes to the forefront and transforming the financial system in the process,” said Carney, a former head of the central banks of England and Canada. “The architecture of the global financial system has been transformed to deliver net zero,” Carney said.

“The gap between what governments have and what the world needs is large,” in order to finance a global energy transition and reach the goal of net-zero emissions by 2050, U.S. Treasury Secretary Janet Yellen said in Glasgow after the announcement of the finance measures. “And the private sector needs to play a bigger role.”

Climate activists have decried the pledge, saying it is just another big promise that won’t be observed.

“Global leaders can no longer trust financial institutions to regulate themselves,” Veronica Oakeshott of Global Witness, an international nongovernmental organization, said in a statement.

Some industry analysts and economists say the private sector plans are far from concrete, and significant problems remain on how to measure the carbon footprint of investment portfolios and align those measurements across international financial markets. Who will verify the accuracy of what banks and investors report?

Others worry that financial firms are there to maximize profits for clients and shareholders and risk losing customers or breaching their fiduciary obligations if they fail to maintain good returns. It remains unclear at this stage how profitable green investments will be.

There are also worries that the fossil fuel sector will see further divestments by lenders and investors eager to reduce their carbon footprint, which will boost energy costs for consumers as global demand for natural gas and oil continues to rise. Fossil fuel investments are already insufficient to meet future energy demands.

That, in turn, has contributed to the current global energy crunch and record-high energy prices for households and businesses, say industry commentators. 

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