COP26 – too much hype, too little substance

  • Published: April 2021

COP26 - too much hype, too little substance

Dieter Helm

April 23rd 2021

Given the continuing global pandemic, there is talk about postponing COP26 again, or, if not, reducing its scale. 30,000 people, mostly flying to Glasgow, does not look like a particularly good idea if most of the world is not vaccinated by then.

Does it really matter if it is postponed? Would it be a disaster if it was simply cancelled altogether? For the PM and several of the other world leaders, like Biden, it obviously would. These grandstand global events allow some of our leaders to be seen in all their global significance, not least to their electorates. For some others, it would frankly avoid an embarrassment of the mismatch between their proclamations and what they are so transparently not doing on the ground.

A good Conference of the Parties (COP) depends upon the groundwork, about whether the basic architecture for an agreement is in place, and what is expected to happen as a result. It is fixed in advance by the Sherpas, and the leaders then take the credit. COP26 has to be seen in the context of the UN-led, top-down attempt to solve climate change. A huge amount of time, effort and political capital have been invested in this COP process since the United Nations Framework Convention on Climate Change (UNFCCC), signed in 1992. The central idea is very simple: a UN-led process will get the nations to all sign up to binding national territorial carbon production targets, so that these all add up to a sufficient curtailment of emissions to limit global warming to 2˚C, or rather, since Paris in 2015, 1.5˚C.

We have been at this enterprise for 30 years so far, and we have less than 30 years to go to meet the 2050 net zero target. At the halfway mark, a good question to ask about COP26 is whether it is working. Has any progress been made under this strategy since 1990? You might think that if the answer is very little, none or even that the process has exacerbated emissions, the obvious thing to do in this hell hole of global warming is to stop digging, stand back and take a good hard look at alternatives.

That is not the way the UN process works. The strategy is to double down, keep digging and keep believing that one more shovelful will get the job done.

So, let’s start with the obvious: has it worked? The answer is clearly no. The only number that really counts is the carbon concentration in the atmosphere (or rather the carbon equivalent, to include the other greenhouse gases). The concentration has been going up at roughly 2 parts per million (ppm) every single year since the baseline of 1990. There is not a blip for the global financial crisis in 2007/08, and amazingly not even for the year of pandemic lockdowns in 2020.

It would be a struggle to find anyone who would have thought back in the 1990 that this would be a triumph for the UN process. COP26 looks like another “triumph” like Paris – where Obama got the Chinese on board. This time it is Biden with a similar outcome in mind. Yet at every major COP since 1990, the world leaders have declared just such a triumph. Nobody can say that this process has worked so far.

For those who believe in the “one more heave” theory of climate negotiations, there needs to be an explanation of why there have been 30 wasted years, and an honest soul-searching to ask whether the COP process itself has made things worse, been irrelevant, or whether the outcome would have been even worse had the COPs not taken place.

That honest appraisal starts with where the emissions have come from over the past 30 years. Almost all answers have China as a major contributor. The country has come from virtually nowhere in the carbon emissions stakes to rank head of the leader board, at now 28% of global emissions. It is over half of the world’s coal burn and is currently adding more new coal-fired electricity capacity to the more than 1,000 coal stations it already has – more than the amounts being retired in the EU and the US. Did the COP process help or hinder this massive rise in emissions in China?

China’s great economic growth miracle follows the pattern of the early (smaller) ones in Germany, Japan and Korea. All are based initially around exports, and in China’s case, energy-intensive exports. Whilst the US, in particular, kept its consumer demand high, China found ready markets for its energy- (and carbon-) intensive exports. Much of China’s early industrialisation emitted carbon on behalf of the US and the EU (roughly half of world economic demand for most of the 30 years).

As the EU in particular adopted unilateral territorial carbon production targets, it made life easier for Chinese exporters. How much easier is debatable, but the fact is that 30 years later the Europe has deindustrialised from heavy energy-intensive production on a big scale. Nowhere is this more apparent than in the UK, where 80% of the economy is services. Europe and the UK now import most of their steel, petrochemicals, fertilisers, aluminium and even cement. By imposing a price (and, indirectly through regulation, extra costs) on the EU industries, it provided an export subsidy for China. Again, how much is debatable. But what is not debatable is that this deindustrialisation process continued in the EU, and China’s extraordinary rise –in both GDP and emissions – marched on, unimpeded in its emissions by anything that happened at COP meetings.

Indeed, China had a second benefit: given the German decision to concentrate on roof-top solar in a country not known for its sunshine, and the UK’s large subsidies to offshore wind, new energy-intensive export markets opened up for China (wind turbines, in particular, are very carbon-intensive to make). This did bring a benefit: it led to a fall in production costs. But it also destroyed a core rationale for Germany’s Energiewende, which was to create and build home-grown new renewables industries. It was never envisaged that the German industrial strategy at the heart of the Energiewende would be a Chinese industrial strategy.

One reason that China could prosper – and partly at the expense of outcompeted EU and US industries – was because the COP process had at its heart the major UN concern about the North–South divide. The UNFCCC should be seen in the context of the Bruntland Report on this very North–South divide. Carried over to the Kyoto Protocol in 1997, the first big achievement of the COP process, the central feature was that the developed countries would accept targets, and the developing counties would “take measures”. In practice, this meant that the US, the EU, Canada and Japan would do the heavy lifting on the very understandable two assumptions: that the developed countries had caused the stock of carbon in the atmosphere to rise through their industrial revolutions; and that the developed counties could afford what the developing countries could not. It was a question of the past polluter pays and global justice.

Kyoto proved to be more a ghetto than a springboard. Japan and Canada gave up early, the US never signed up, and that left the EU. Even this needed the EU to offer to support Russian entry into the World Trade Organization (WTO) in order to get the quorate up to a high enough level to trigger the Kyoto operational requirements. Back in the mid-1990s Russia was in deep economic difficulties and therefore not thought to be likely to increase its emissions anyway.

The Kyoto Protocol was the US’s idea, but Clinton could not sign up because there were no votes in it. The US Senate would never sign up to a UN-treaty control over its economy. It never has and this is just one reason why the COP-negotiated targets are unlikely ever to be binding and legally enforceable. Bush and Obama were in a similar position, and Trump’s position was no different, despite the harsh rhetoric he added. All of this was dressed up by US politicians in the language of “only if China makes similar credible commitments”. It never has, and it does not look likely to do so at COP26.

China might of course make commitments, but the credibility is hard to have much faith in, given the current expansion of the coal burn, and the wider geopolitical context. It is the latter that is new for COP26. China is embroiled in very difficult controversies over the incarceration of the Uighurs in north west China; the alleged sterilisations and separation of children and even torture; the rising tensions over its aims to take back control of Taiwan; the militarisation of the South China Seas; the suppression of democracy in Hong Kong; and the theft of IP. Its growing information and cyber capabilities have led the US and EU members to place direct restrictions on Chinese companies.

COP26 is set in the context of the worst global political background since 1990. None of this is going to get any better any time soon, and China has embraced Russia, which has no serious interest in addressing climate change, busy as it is opening up the Northeast Passage in the Artic and developing further its oil and gas industries (and increasing military tensions in Ukraine). The US and the EU need China to tackle climate change, and China, in turn, needs the US to allow it to achieve its ambitions with the Uighurs, Taiwan, and Hong Kong, and to agree to withdraw from the Pacific areas where China is expanding its influences. China wants a wider geopolitical outcome at COP26 in exchange for agreeing non-binding targets. It is not surprising that China has flexed its muscles and declined to join pre-COP meeting organised by the UK, and offered no new targets at Biden’s Earth Summit. These wider geopolitical issues cannot be decoupled from COP26. While China can sign statements of intent with the US, targets are just that, not credible commitments.

So far China has variously offered to peak its emissions by 2030 and to get to “carbon neutrality” by 2060. The rising coal burn puts 2030 in doubt, and at its current economic growth rate of around 5–6% per annum, it will be twice its current economic size (and twice its consumption level) by 2030, and, if it keeps going, by 2050 there will be four China’s compared to 2020.

If China is a problem for COP26, there is also the question of what happens in India and Africa, both potentially “new China’s” of the next 30 years. India’s minister for power, Raj Kumar Singh, has described the 2˚C target and the COP26 ambitions as “pie in the sky”. The BBC recently reported that Mr Singh said poor nations want to continue using fossil fuels and the rich countries "can't stop it” (https://www.bbc.co.uk/news/science-environment-56596200). It is worth quoting what he said in some detail since it very well captures the North–South dimensions at issue at COP26. "2060 sounds good, but it is just that, it sounds good," Mr Singh told the International Energy Agency (IEA).

To the discomfort of his fellow panellists, Mr Singh singled out developed countries where emissions per capita are much higher than in India.

"You have countries whose per capita emissions are four or five or 12 times the world average. The question is when are they going to come down?"

"What we hear is that by 2050 or 2060 we will become carbon neutral, 2060 is far away and if the people emit at the rate they are emitting the world won’t survive, so what are you going to do in the next five years that's what the world wants to know."

Mr Singh pointed out that while it was the richer countries who had burned most of the fossil fuels that have caused the problems, they now wanted developing countries to stop. That was unfair, he said.

"The developed world has occupied almost 80% of the carbon space already, you have 800 million people who don't have access to electricity. You can't say that they have to go to net zero, they have the right to develop, they want to build skyscrapers and have a higher standard of living, you can't stop it," he told the meeting.

When it comes to Africa, its population may double by the second half of this century, it is growing its economies very fast and its natural capital (and especially its carbon stores in forests, grasslands and soils) is likely to lose a lot of carbon in the process. Nigeria may by the end of the century have more people than the US or the EU, and possibly even of both combined. Whilst there are lots of plans and opportunities to develop decentralised energy systems – because the centralised ones do not everywhere exist – the scale of the challenge is immense.

COP26 is really all about these three major carbon players of the future: China, India and Africa. Brazil and the Amazon, the countries of the Mekong, Indonesia and the Philippines are also key parts of the climate’s future.

So what exactly does COP26 bring to the table? It cannot offer China the geopolitical prizes it wants, and it cannot make India or any of the main polluters in Africa do much. All three have to be “persuaded” that this is their interests. It is not enough to say that they will suffer from climate change. Climate change will happen anyway, and this is a classic prisoner’s dilemma. So far it has worked well for China: it has got others to do some heavy lifting, while itself prospering in an ever-greater carbon-emitting fashion.

COP26 brings us back to the start: to the North–South divide. Developed countries are going to have to pay the developing countries to reduce their emissions. Brazil and India have made this very clear. (Brazil has asked for payment in advance to stop burning the Amazon.) Others know that this is the main ask. China, in its agreement with the US, has made transfers a clear principle.

Is there any chance this is going to happen? There have been lots of promises in the past about climate funds and transfers. But the political reality is rather different. No major economy makes the sorts of transfers that would be required to make a dent in the rises in the concentration of carbon in the atmosphere. The UK – the COP26 host and one of the “world leaders” – has just cut its overseas aid budget. Across the EU there is no appetite to join such transfers, especially in the context of the economic shocks that the pandemic has delivered. The US aid budget is around 0.3% of its GDP. It is just not going to happen. The odd $100 billion is not going to make much of a dent on the emissions trajectories.

This means that COP26 is at an impasse. There is one further dimension to add to this impasse, before we get to the alternative, bottom-up approaches. It is that the holy grail of the COP process is to get binding legal agreements. That is what was supposed to have been achieved at Paris, following the Durban COP. It never happened and it probably never will. It is not just the US who will not give up sovereignty. Others hide behind its position. The only legally binding bit was that the signatories come up with new targets every five years, starting at COP26. That is what happened when the Copenhagen COP broke down, and the Chinese and the US agreed a side arrangement, called the Copenhagen Accord. The voluntary pledges have never added up to 2˚C, and credible pledges will not be made equal to 2˚C or even the 1.5˚C at COP26. The central aim of the COP process over the last 30 years – a legally binding agreement on targets – is, to use the India minister’s phase in a slightly different way, “pie in the sky”.

What should happen at COP26?

COP26 might not happen this year. If it does, it could turn out to be inconclusive, yet it will most likely be declared another triumph. It could turn out to be the point at which the COP process ends in acrimony. Any of these outcomes is possible, but whatever the prognosis, the UN will be determined to keep the process going. It has a huge amount invested in it, including staff and budgets. Climate change has become part of its raison d’être. The UN as a global institution imagines a world where the national states subsume their interests and sovereignty into the parliament of the world (in a context in which the UK as host of COP26 does not want sovereignty ceded to the EU, and many in Scotland no longer want to cede sovereignty to England).

In all this high politics and diplomacy, it is easy to lose sight of the practical and the achievable in the noise of the great high-level strategy. COP26 could do a number of humbler things, but with greater longer-term traction on the problem. Amongst these are to shift the debate from being only about emissions to being about emissions plus sequestration, to integrate natural carbon sequestration with concerns about the other great crisis – the collapse of biodiversity – and to focus on the key natural sequestration assets, such as the great rainforests and the soils.

Here are some of the things that might be done.

On emissions, it would be a good idea to try to link up the measurements of territorial emissions with the concentration of carbon in the atmosphere. There are two bits to this: to measure all the emissions properly, and especially those from “nature”, including soils (with around four times the carbon of the atmosphere), rainforests, coastal marine habitats and oceans; and to ascribe the national shares of the increased carbon in the atmosphere.

The former would lead to a recognition that climate change is as much about the quantity of carbon that has already been and could continue to be sequestrated in the soils, peat deposits and trees – the stock of carbon assets – as it is about the loss of carbon from them, the huge missing bit of the emissions story. Whilst everyone focuses on power stations, and coal, oil and to an extent gas (all of course important) and the decarbonisation of electricity, transport and heating, these are only one part of the overall story. The shift of focus makes land use at least as important as energy, and highlights the connection between energy and chemically intensive (carbon-intensive) agriculture. It brings the damage done by trawlers and the loss of coastal habitats into sharp relief.

Ascribing to nations their share of the increase in carbon concentrations in the atmosphere shifts the focus from territorial production to national carbon consumption, and hence to the national carbon footprints. This has a further advantage in forcing the trade dimensions onto the carbon agenda, and, as we shall see, this is the key to a bottom-up approach to tackling climate change, rather than the top-down COP process so far.

The next thing to do is to recognise that biodiversity loss and climate change are intimately linked and not two separate environmental crises. Attention has been paid to the damage that climate change will do to biodiversity, especially if the loss happens very quickly, but less has been paid to sorting out the interventions on carbon that could make biodiversity loss faster. The obvious example of the latter is the planting of fast-growing new forests, for example for spruce conifer plantations and eucalyptus.

But before we get to sequestration, the emissions from the soils and peats and the destruction of the rainforests and coastal marsh areas need to stop. This requires capital maintenance to at least hold these renewable natural capitals constant so that the next generation gets a set of natural capital assets at least as good as the one we inherited. It means stopping the carbon losses from soils, stopping the burning of the rainforests, and taking sheep off the peat bogs so that the sphagnum moss can recover them.

Only then can we turn to natural carbon sequestration, once the baseline has been established and stabilised. The extra carbon sequestered should be above the levels that maintain biodiversity and the other natural capitals, and, where possible, enhance them at the same time. Native deciduous woodlands are a possibility, especially if in upper catchments where they can slow down the water flow and reduce flood risk, provided they are not planted on peat. Natural carbon is complex, system-based, and far from the simplistic idea that all we need to do is plant the trees, measure the carbon take-up and then start an offset market going.

In any natural carbon sequestration exercise, it matters what happens when the carbon has been sequestrated. For example, if it is trees and they are then burnt in power stations, the net effect is negative, since the planting of trees and their maintenance involves some carbon emissions. The trees take up carbon over a few decades; the coal took it up millions of years ago. Both are carbon stocks. Just as we don’t want to burn coal, so we don’t want to burn trees. The obvious answers for trees once the carbon has been sequestrated is either to let them gradually rot back into the soils, or to “bury them” and their carbon in buildings as timber.

COP26 could set out a framework for measuring natural carbon sequestration, including the principles and measurement of the co-benefits or co-damage done by the specific options as they arise.

This framework is key to getting a carbon offsetting market going, so the decentralised polluters and landowners can negotiate to find the best and therefore cheapest carbon offsets available, and avoid the greenwash that is currently lapping around the voluntary offset markets. At the heart of this framework are the baselines and the necessary condition to “do no more harm” from those baselines.

COP 26 could be the opportunity to bring all this together into a coherent accounting framework, not just for carbon but for the natural environment more generally. This is not a one-off decision to be made, but rather a proper process, tying in the national accounts to the wider environmental context. A lot of this is already under way: what is needed at COP26 is to move from the initiative and satellite accounting to a binding UN set of meaningful conventions. It is something that the UN should be good at.

COP26 could build on accounting conventions and link them to the processes of global taxation harmonisation, and the extension of carbon pricing. The shift towards global corporation and profit taxes, led by Biden, is the benign context in which we could start to get serious about global carbon pricing.

This is the necessary integrating step to make all these components fit together. A carbon price is not sufficient, but it is very likely to be a necessary condition for dealing with climate change. COP26 can set the long-term overall ambition: a uniform global carbon price applied to all and every sector of the economy and hence to everything.

This is not something that will be achieved overnight, but having a clear sight of the goal allows a set of incremental steps to take place towards this end.

One procedural step that COP26 can engage with is to create a carbon tax/pricing register, and start publishing this annually. Setting principles that can be applied to trade, to which we turn below, would help to give substance to the environmental clauses in the WTO agreements. This in turn leads us to the carbon border adjustment and how this provides an alternative framework of bottom-up unilateral actions by a coalition of the willing, and, in the process, leads to a gradual proliferation of carbon prices across the world economy.

What is the alternative?

If a top-down COP26 is not going to break the continued increase in the concentrations of carbon in the atmosphere, and is unlikely to avoid a repeat of the last 30 wasted years, then is there any other way of achieving this vital outcome? In particular, is there any way that countries can volunteer to pursue unilateral carbon targets, irrespective of the actions of others, without simply creating a subsidy – and incentive – to the unwilling?

The answer is that unilateral action, such as the net zero legal targets in the UK, only ensures that its citizens no longer contribute to global warming if the target is extended to include imports and trade. If it does not – and the UK’s target does not – then a unilateral carbon production target on a territorial basis can actually make climate change worse, by providing an implicit subsidy to countries exporting carbon-intensive goods to the UK. At the global scale, this is what has been happening over the last 30 wasted years. The great increases in carbon emissions in China have found export markets to the EU and the US, and hence exported its emissions to countries without this showing up in the importers’ carbon territorial production numbers. Some of China’s 28% share of emissions is really “owned” by the US and Europe.

Unilateralism applied to a problem that is so obviously global therefore requires that imports are treated on a par with domestic production. The obvious way to do this is to have a domestic carbon price, and apply the same price at the border – a carbon border adjustment. Then the production targets would be transmuted into consumption targets and genuinely measure the impact of the unilateral countries’ carbon footprints in the global concentration of carbon in the atmosphere.

Yet just because the UK, or even the EU and possibly the US, stop their carbon footprint going ever upwards does not solve climate change. As argued above, this is all about China, India and Africa and Brazil. Why would a carbon border price have any effect on them? The answer lies at the borders to which the carbon adjustment is applied.

Suppose a shipload of steel arrives from China, or a shipload of soya beans from Brazil. Arriving at the UK port, the shipper is asked to show a carbon declaration– the carbon in the products and any carbon tax already paid on it. If there is no tax certificate, the border carbon tax is applied, and the revenues go to the UK government. The alternative is to pay the carbon price in the country of origin, and to the government of the country of origin.

It is not hard to see how this creates a powerful incentive for the country of origin to introduce its own carbon price. Hence, the bottom-up result: carbon border adjustments encourage the proliferation of carbon taxes globally. And since China, India, Africa and Brazil all rely on exports to the developed countries, the incentive could be a powerful one.

This alternative to the top-down COP approach is more likely to be successful. It has the minimum condition that any country that goes unilateral can do so knowing it is stopping causing climate change. That in itself is much better than the current position, where neither the EU nor the UK has stopped doing this, or is even in the process of stopping, despite what their governments tell their populations they are doing. And despite what their publics widely believe. If the EU and the UK and the US actually stopped causing climate change, this would indeed be a very big step forward.

The prize would be to encourage China, India, Africa and Brazil to take measures themselves to address climate change. To get to this position, the US has to brought on board. This is less daunting a challenge than it might seem. For the US has a concern about US–China trade, some of it well grounded in fears about IP theft, state subsidies and other non-tariff distortions to trade. If the US was to apply a carbon tax to imports, this would have a really big impact on trade (and even better if the US and the EU both did so on the same basis). This would be the most profound act yet taken globally to address climate change and a first tentative step to avoiding another 30 wasted years – provided, of course, the tax was domestic as well, which it would have to be to meet WTO conditions.

This is the alternative route, and it is one that COP26 could actively encourage. It should spend more time on this, and less on trying to make carbon territorial numbers add up to 1.5˚C.

Lobbyists and the champions with a deep vested interest in the COP process and its bureaucracies will have a field day claiming that this is all impractical, that the carbon content of imports cannot be accurately measured, and the administrative costs involved are too high. “It is all too difficult” is a classic lobbying line. But this is ridiculous: if it were true then domestic carbon taxes and permits schemes would also be “too difficult” and they are obviously not so. The lobbyists are effectively arguing that it is better to be perfectly wrong (no border adjustment) than to be roughly right.

The pragmatic approach to carbon border adjustments starts with the big items in trade. These are traditionally petrochemicals (and plastics), aluminium, steel, fertilisers and cement. The default could be the application of a rulebook which takes the share of coal in the exporter’s energy systems (possibly plus oil), and then applies the benchmark share of energy in the total production costs of the export. It could use the carbon intensity of the economy in question. There are other options, and what matters is to agree a crude common basis. It would then be open to any exporter to challenge the conventional benchmark numbers with more accurate measurement, with independent support. It is not hard to see how this could be on the basis of a UN-led accounting framework proposed above.

Over time more and more exporters could be brought within this framework. An obvious case is information and communications technology (ICT), and especially Bitcoin. If the Bitcoin was mined in, say, Iceland from geothermal energy, it would obviously be different from Bitcoin mining based on coal in China. An exemption of exports from Iceland could apply to this and more generally too.

The general global framework for carbon border adjustments and carbon pricing more generally is yet to be agreed. It could be the next General Agreement on Tariffs and Trade (GATT) with the WTO – a global agreement with a global organisation to support its growth and development, incorporating the various accounting principles, notably those relating to offsetting too. There are various institutional options.

Conclusion

COP26 is heading the same way as the Paris, Durban, Copenhagen and Kyoto ones before it. It will be declared a “triumph”, “the moment world leaders finally started to win the war against climate change”. Except it won’t be; it will be more of the same, and the concentration of carbon in the atmosphere will carry on going up as it has for the last 30 wasted years when all these previous “triumphs” were negotiated and announced by world leaders.

It does not have to be like this, but it will be unless the facts on the ground are recognised for what they are, and the coalition of the unilateralists is willing start to move from production to consumption targets – ie, to apply these targets to the impact on concentrations of carbon in the atmosphere, not domestic carbon territorial production alone – and get serious about carbon pricing. This really would be a turning point, whether or not the great COP26 jamboree actually happens this November or later.

COP26-too-much-hype-too-little-substance.pdf

© Dieter Helm. All rights reserved.Copyright & Terms