The Climate Crisis: Does 2021 Bring Fresh Hope?
The Climate Crisis: Does 2021 Bring Fresh Hope?
Director, Analyst, Responsible Investment Team
Vicki Bakhshi is a Director in the Responsible Investment team. She joined the firm in November 2006, prior to which she spent five years in the UK government, incl…
Vicki Bakhshi is a Director in the Responsible Investment team. She joined the firm in November 2006, prior to which she spent five years in the UK government, incl…
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With Joe Biden now confirmed as the next US President after a tumultuous post-election period, and the Democrats poised to take control of the Senate with projected wins in Georgia, the US political landscape has been completely transformed.
One of the issues this will have a major impact on is climate change, and the prospects for the success of the critical COP26 negotiations in Glasgow. Originally the meeting would have taken place in November 2020, but was put on hold by the COVID pandemic. Had the negotiations taken place on the original date, though, it’s almost impossible to imagine them having a successful outcome. The US is a key player in the meeting, but in November was mired in uncertainty and preoccupied with its own domestic challenges. The postponement to November 2021 gives the President-Elect a chance to work on putting his climate pledges into practice, giving the whole event a greater chance of reaching the level of ambition required.
So what are those pledges? As well as re-joining the Paris agreement, Biden has said he wants to adopt a net-zero greenhouse gas emissions 2050 goal, and to decarbonise the power sector by 2035 – the latter no mean feat, bearing in mind coal still makes up almost one-quarter of electricity production, and natural gas a further 38%1. He has also pledged to revitalise the US’s role in the international negotiations, and has already announced he’ll be installing John Kerry, one of the architects of the Paris agreement, as his special climate envoy.
Despite the ‘Blue Wave’ giving Democrats control of the Senate and House, their majorities are slim and Biden will doubtless still face challenges getting some of his domestic legislation through. But the shift in the mood music is unmistakeable, and that will have a powerful impact on the international climate talks.
Alongside the seismic shift in the US position, the importance of China’s decision last September to adopt a 2060 net zero goal cannot be overstated – particularly in terms of the impact on the political discussions taking place in other major emerging economies, such as India. Across the rest of Asia we have also seen Japan and South Korea setting net zero emissions objectives. These developments point to a marked shift from the situation only a few months ago, at which stage Europe was the only major economic bloc to have set itself on a net zero pathway.
Will these changes make the Glasgow COP26 negotiations easy? Of course not – there will still be tough discussions to be had. Perhaps the most difficult area is not so much the adoption of long-term net zero goals, but the trajectory from here to 2030. The scientists behind the Intergovernmental Panel on Climate Change (IPCC) have made it clear that to keep our chances alive of limiting the global temperature rise to 1.5 degrees Celcius, global greenhouse emissions need to be cut by 50% by 2030. This is an enormously demanding target which will require brave policy decisions to be taken in the very near term.
A critical factor in building momentum between now and COP26 will be the actions of the private sector. We have seen a growing number of companies take on net zero emissions ambitions – almost 1,400 now globally, according to the UN’s Race to Zero Campaign2. The finance sector plays a pivotal role here. At BMO Global Asset Management, we’ve committed to playing our part both through continuing to engage with investee companies to ask them to adopt ambitious climate strategies, and through our own ambition of net zero emissions across all our investments by 2050. The road to Glasgow is a long one, but there are more reasons to be hopeful than there have been for some time.
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Vicki Bakhshi recently appeared as a guest on BMO Sustainability Leaders podcast. Listen to the discussion here.
1https://www.eia.gov/tools/faqs/faq.php?id=427&t=3
2https://unfccc.int/climate-action/race-to-zero-campaign
