After COP26, Fixing Fossil Fuel Finance
The transition to serious clean energy financing gets a global boost
The 2021 United Nations Climate Change Conference, commonly known as COP26, just wrapped up in Glasgow, Scotland. Alas, high expectations for ambitious emissions targets and the phasing out of coal were not quite met. But there were commitments made to channel funding for fossil fuel developments into clean energy instead. The following high-level view explains what’s worth celebrating and what needs more attention.
The most important outcomes from COP26 will be directly related to two “F-words”: finance and fossil fuels. Close attention should be paid to pledges for new finance for mitigation, adaptation and loss and damage. But we must remember the other side of the equation—the urgent need to cut off funding for fossil fuel projects. As the International Energy Agency made clear earlier this year, there is no room in the 1.5℃ carbon budget for any new investments in fossil fuels.
The commitment from more than 25 countries to shut off new international finance for fossil fuel projects by the end of 2022 is one of the biggest successes to come out of Glasgow. This could shift more than US$24 billion a year of public funds out of fossil fuels and into clean energy.
There was also short-lived hope that the COP decision would call on parties to “accelerate the phasing out of coal and subsidies for fossil fuels.” According to the United Nations, eliminating all fossil fuel subsidies would reduce global carbon emissions by up to 10 per cent by 2030. Sadly, before the pact was agreed, the text on coal was watered down, the phrase “phasing out” was replaced with “phasing down” and the weasel word “inefficient” was inserted before “subsidies for fossil fuels.”
The fact that not even a weak reference to fossil fuels can survive in the decision text speaks volumes about how divorced the COP process is from the realities of the climate crisis. And this is unlikely to change as long as fossil fuel lobbyists are permitted to attend.
Kyla Tienhaara is Canada Research Chair in Economy and Environment at Queen’s University. This article was first posted on The Conversation.