China and Big Business Give Climate Diplomacy a Kick-Start at UNGA and Climate Week
Last week marked the beginning of the UN’s 75th General Assembly (UNGA) and the first time the General Debate, a worldwide meeting, has been virtual. Founded on a belief in the importance of multilateralism and collective action, the first UNGA took place in the wake of the devastation of World War II. Today, the world faces enormous challenges, as people, communities, companies and countries wrestle with the health, economic and unemployment impacts of the COVID-19 pandemic. At the same time, severe wildfires in the Western U.S., floods in the Sahel and a record number of hurricanes remind us that climate change is already here and affects us all.
While these daunting challenges are far from being overcome, this UNGA and the concurrent Climate Week offered a crucial moment for leaders to demonstrate global solidarity for a fairer, safer, stronger world. Did they succeed?
In anticipation of this moment, countries, regions and subnational governments made some major announcements at UNGA and in recent weeks. These leaders showed that it is possible -- indeed desirable -- to simultaneously address the crises of the pandemic and climate change.
Most notable among them was China’s surprise announcement that it will scale up its climate commitment with the aim of peaking carbon dioxide emissions before 2030 and achieving carbon neutrality before 2060. This could be huge. Fulfilling China’s net zero emissions commitment alone could lower projections on global temperature rise by 0.2-0.3 degrees C (about 0.4-0.5 degrees F). That said, the devil is in the details, and more precision is needed on how China will achieve these goals, including an early peaking date. High on the list should be how China will square these announcements with the almost 250 gigawatts (GW) of coal-fired power that is currently under development in the country. Getting to net zero means reducing greenhouse gas (GHG) emissions to as close to zero as possible and removing what is left through carbon removal processes. And the bottom line is that China has a major incentive to fulfill its ambitions: new analysis shows that with the right policies, a pathway to reach its carbon neutrality target by 2060 could potentially grow China’s GDP by as much as 5% this decade.
China is now poised to join the 13 countries that have already submitted updated Nationally Determined Contributions (NDCs). Those countries include Chile, Jamaica, Rwanda and Cuba, which have submitted strengthened NDCs this year. Last week, South Africa became the 18th party to submit its Long-Term Strategy (LTS), which is aimed at reaching net zero emissions by 2050.
The climate leadership shown by so many vulnerable and developing countries, despite their low emissions and the challenges of the COVID-19 pandemic, comes with an earnest call for major emitters to step up their ambition through strengthened NDCs. This is also a time for a renewed commitment to solidarity, yet despite past pledges, developed countries have thus far failed to deliver the climate financing needed to enable developing countries to pursue climate action and build resilience (see further below).
However, there was also notable progress outside of the official UNGA meeting, including some developed countries signalling their intention to step up climate ambition:
- The European Commission (EC) put forward its proposal, to be confirmed this year, to raise the EU’s emissions target from at least 40% below 1990 levels by 2030 to at least 55%. EC President Ursula Von der Leyen also spoke on the EU’s COVID recovery package during the state of the union on September 16th, reiterating that 30% of the €750 billion ($875 billion) recovery package would go towards climate-friendly projects.
- Canada’s Speech from the Throne on September 23rd specifically mentioned the need to build back better from COVID-19. Governor-General Julie Payette announced that plans to exceed Canada’s 2030 target would be brought forward soon, along with formal legislation to reach net-zero by 2050.
- Shortly after China’s announcement, South Korea’s national assembly recognized the climate emergency and set a non-binding goal of net zero emissions by 2050.
Business and Private Sector Action
More bold climate commitments emerged from the private sector during UNGA or shortly before, including:
- Walmart pledged to be 100% carbon neutral across its global operations by 2040 – without using carbon offsets.
- Facebook committed to decarbonize its supply-chain by 2030, and joined over 280 other companies in committing to net-zero and interim science-based targets in the Business Ambition for 1.5°C campaign.
- General Electric announced its exit from the market for new coal-fired power plants, adding that it will focus on renewable energy and power generation businesses that they believe have attractive economics and a growth trajectory.
- Climate Action 100+, a group of investors responsible for over $47 trillion in assets, called on the 161 biggest greenhouse gas emitting companies to enact strategies to reach net-zero emissions by 2050.
- PepsiCo announced that it is transitioning to 100% renewable electricity globally, focusing first on company-owned operations by 2030, with a 2040 target date for its entire global operations.
- Almost 1,000 companies have signed on to the Science Based Targets initiative, pledging to set emissions reduction targets consistent with a Paris trajectory.
Transparency sits at the heart of achieving all these admirable private sector and business goals, and to enable better decision-making that shifts private finance to align with climate goals. During the UNSG’s High Level Roundtable on Climate Action, UN Special Envoy Mark Carney spoke on the need to make disclosure of climate risk mandatory, not voluntary. France was an early mover in requiring some transparency around climate related investments and New Zealand became the first country globally in mid-September to require full mandatory disclosure for banks, insurers and asset managers, following the recommendations of the Task Force on Climate Related Disclosure (TCFD). The UK plans to mandate such reporting for pension schemes and Fiji announced it will have mandatory climate reporting across all government ministries. Canada has required that companies over a given size receiving COVID-19 bail-out support disclose their climate-related risks in future, as well as how their operations would support the country’s climate goals. At the subnational level, New York State is requiring insurers to integrate climate risk into decision-making too. Now others must follow.
Public Finance and Solidarity
Disappointingly few new commitments were made on public climate finance. This, despite the fact that countries such as Bangladesh, Fiji and Niger called for scaled up investment to support countries to adapt to the unprecedented impacts of climate change and resulting losses and damage. UN Secretary General António Guterres, as well as Special Envoy Carney, reminded developed countries to deliver this year on their commitment to mobilize $100 billion dollars a year for mitigation, adaptation and resilience in developing countries.
One of the few bright spots was the Ambition Initiative, launched by the NAMA Facility, with €168 million ($196 million) from Germany and the UK for technical and financial project support for developing countries. Prime Minister Justin Trudeau also reaffirmed Canada’s commitment to the goal of reaching $100 billion in annual climate finance, a welcome signal given that Canada is lagging behind similar countries in its climate finance provision. As part of the recently launched COP26 Energy Transition Council, the UK announced it is investing £50 million in the new Clean Energy Innovation Facility (CEIF) to support access to clean energy technologies for developing countries. This is a step in the right direction towards meeting the UK’s International Climate Finance spend of at least £11.6 billion from 2021 to 2026, but is still insufficient.
Despite the dearth of new financing for solutions, there is growing momentum behind stopping financing for coal. Not only is coal bad for the climate, it is also a major contributor to air pollution, which results in an estimated 4.2 million premature deaths each year, and increases the severity of coronavirus. This week, Guterres reiterated his insistence that coal has no place in COVID-19 recovery plans. Indeed, the UN’s own pension fund announced this month that it was fully divested from the coal sector.
This sentiment has legs. The Asian Infrastructure Investment Bank promised this month that it would end its financing for coal. This builds on last year’s announcement from the African Development Bank that it was moving away from coal investments. Many of the other multilateral development banks (MDBs) have already made that same commitment. The IFC, the private sector arm of the World Bank, published rules this last week prohibiting investments in financial institutions that do not have coal exit plans. IFC standards are widely adopted by private sector lenders, so this move could have a far larger impact than their direct financing. This also follows a clear trend as we see more private investors, insurers and financial institutions move away from supporting coal, as the economics of new coal no longer makes sense.
A few countries remain outliers in this shift. Japan, South Korea and China have been the main countries still providing coal financing to developing countries through export credits, though with positive signals recently from Japan and South Korea on a shift away from such finance. As president of COP26, the UK should take the lead on ending coal and other fossil fuel financing and step up financing for renewables as a solution to deliver energy access.
Time to Move from Talk to Action
These ambitious announcements have helped to kick-start climate diplomacy at a time when the world is mostly focused on dealing with the impacts of COVID-19.
After major announcements from China, South Africa, the EU and others, the climate community is asking: who will be next? How will the ambitious targets announced by so many major companies and investors help support and even spur governments to step up their own commitments? And when will the much-needed financing and solidarity package materialize?
Now is the time to move from talking about action on climate change to actually acting on it – and this last week a number of leaders have stepped up to do so. Now more than ever, our common objective must be a just transition to a better, low-carbon and resilient future for everyone.