The COP26 Climate Summit in Scotland is now in the books, with the signing of the Glasgow Climate Pact. Kim Parlee speaks with Priti Shokeen, Head of ESG Research and Engagement, TD Asset Management, about the commitments made by countries to pave the way for limiting global warming.
- Priti, it's always good to have you with us. Thanks so much. Can we start with just maybe what the overall sentiment is towards COP26? Is it going to achieve what was, I think, the objective, which is to slow down global warming?
- Thanks, Kim, and great to be here to give an update on this. So it depends on who you ask. John Kerry is very positive but Greta not so much. I think some clear progress has been made on the Paris Agreement and the commitments we made five years back. And in general, I think there's a sense of urgency among nations, but certainly bogged down by their economic realities.
So some of the key challenges that lie ahead of us are essentially near-term progress that needs to be realized on delivering climate commitments by nations. Scientists are not as upbeat as they project anywhere between 1.7 degrees to 2.8 degree warming depending on the actions that are taken now. To quote the president of COP26, "We kept the 1.5-degree scenario alive, but its pulse is really weak."
So according to also the International Energy Agency, if all the new pledges are met on time, the Earth would be on pace for warming roughly around 1.8 degrees Celsius, which is actually below the target that was set by the Paris Accord. So it's kind of generating mixed reactions and sentiments thus far.
- As there always is. There's always mixed reactions. Maybe it probably-- if we can maybe delve in a little deeper to understand some of the things that came out of it, I believe there was action against deforestation, methane, fossil fuel subsidies, so there were some actions, positive actions, that came out of things.
- Yeah, absolutely. There are certainly a lot of positives that we can focus on. The big early win at COP26 was certainly methane. And it was led by the US and it's called Global Methane Pledge. And it was signed over 100 countries, including Canada, the US, the EU, and major methane emitters such as Pakistan and Nigeria. The signatories have pledged to cut their methane emissions by 30% below 2020 levels by 2030.
Now, methane is more potent greenhouse gas as compared to CO2, but it stays in the atmosphere for only 20 to 30 years versus hundreds of years for CO2. So this pledge is seen as an opportunity to quickly reduce global temperature warming. Similarly, on fossil fuel subsidies, around 30 countries, including Canada, the UK, the US signed a statement that they would end new direct public support for the international unabated fossil fuel energy sector by the end of 2022.
Another very good winner in our minds is deforestation. Around 130 companies including Canada, China, the US, and the UK, and more importantly Brazil committed to working collectively to halt and reverse forest loss land degradation by 2030. And this is extremely important because deforestation has very strong implications for climate, as not only do trees act as carbon sinks that capture and store CO2, but when they are cut down, they emit the carbon they have trapped back into the atmosphere.
So certainly some positive developments. Another one I would note very quickly is in the transportation sector with 30 countries pledging to make zero-emissions vehicles available and make them accessible, affordable, sustainable in all regions by 2030 or sooner. There's also some talk about green shipping corridors, which is very encouraging as well.
- It's a long list on a very, I think, positive list in terms of things are happening. So that's great. The flip to that, of course, I know was some misses, some people pointing out coal, the language being used instead of phaseout, phasedown.
- Yeah, that was a bit disappointing to many parties that coal phaseout was watered down to coal phasedown. Prior to the conference, organizers shared that they hoped COP26 would be the beginning of the end of coal-fired power generation around the world. But there was certainly some pressure from India and China resulting in the language being changed to phasedown.
Ultimately, this means that countries that rely heavily on coal as part of their energy mix will take steps to reduce their reliance rather than eliminate it altogether. And another miss, I would say, was agriculture, as it did not get its fair share of attention being one of the highest carbon-emitting sectors as well.
- And I apologize, Priti. We're going to have to have you back, get a little more time, because I've only got a couple minutes. But I do want to touch on a plan to standardize the global trading-- carbon trading market. That is interesting because my understanding is the price of carbon is really starting to surge.
- Absolutely. And there's currently no global standardized rules in place to govern carbon credit between countries and companies. So the new rules that were agreed upon will potentially eliminate the option to double count as well. So there's a lot of good stuff coming out on the carbon trading front. Also, 5% of the proceeds from offsets will be collected to go towards climate adaptation fund for developing countries. So we're pretty excited about that development.
- Yeah, I've got 30 seconds, Priti. And it's not fair to ask you this. But, Canada, what specifically did Canada commit to at COP26?
- Canada's latest target, Kim, under the Paris Climate Agreement, is a 40% to 45% reduction in greenhouse gas emissions below 2005 levels by 2030. Canada made significant commitments to COP26 this year to phase down coal, reducing public financing to fossil fuel projects, capping specifically oil and gas sector emissions as well, and committing to all new cars and vans to be net-zero emissions by 2040. Now, the challenge is really to put them in action.
- It really will be. And I'm sure there'll be lots of people on both sides who talk about the way to do that makes sense for a lot of Canadians. Priti, it's always a pleasure. Thanks so much. Please join us again.
- Thanks, Kim.