COP26: Climate summit must focus on ambition, finance, carbon markets: EC chief

Success at the upcoming UN Climate Change Conference in Glasgow rests on greater ambition to reduce greenhouse gas emissions, increased climate finance and rules on an international market for carbon credits, European Commission chief, Ursula von der Leyen, said ahead of a G20 summit in Rome.

The COP26 talks must set the world on a more ambitious track to deliver on limiting global temperature increase to agreed limits, von der Leyen said in a statement Oct. 28.

Von der Leyen said a successful outcome at COP26 rests on three pillars. The first is increased ambition by countries to close the gap between where global emissions are currently headed and where they need to be to stay on track to limit warming to well below 2 degrees Celsius and as close to 1.5 degrees as possible.

The UN Environment Program issued a report Oct. 26 warning that the world needs to cut an additional 13 billion mt of CO2 equivalent greenhouse gases by 2030 to stay within a two degrees C trajectory.

The second pillar is climate finance, von der Leyen said.

Industrialized countries agreed in 2009 to provide $100 billion per year of climate finance by 2020 to help the poorest countries deal with the effects of climate change. However, COP26 host country, the UK, said Oct. 25 this deadline would not be met, with the full sum now expected to be achieved by 2023.

"And the third pillar is about the rulebook on international carbon markets," von der Leyen said.

At the climate summit in Glasgow, running Nov. 1-12, countries are attempting to hammer out agreement on the Paris Agreement's Article 6, which sets out the terms of a global market for trading emissions credits.

"So, we need to make progress on these three points mainly during COP26: It is the ambition of cutting more emissions now; it is the climate finance for the least developed and most vulnerable countries; and it is completing the rulebook," said von der Leyen. "And I expect the negotiators to do their utmost, that we really advance in those three topics."

"It is good to see that many more countries have signed up to net-zero by mid-century. But what we also need now are not only targets, but we need very concrete plans and immediate action on the ground really to show in detail how we are going to reach those targets within this decade," von der Leyen said.

The price of carbon credits has increased substantially in 2021, with interest growing as companies draw up sustainability plans as part of efforts to reach net-zero emissions -- in many cases by 2050, but with some targeting an earlier time frame. Bilateral emissions reduction purchase agreements between governments are also seen adding to demand for credits.

S&P Global Platts assessed CORSIA-eligible Carbon (CEC) credits at $7.25/mt CO2 equivalent at the close Oct. 28, compared with just 80 cents/mt in January when the price assessments were launched.

Agreement on Article 6 at the Glasgow summit could also boost demand from governments as they look to trade emissions credits as a flexible way to meet national emissions reduction targets -– the so-called Nationally Determined Contributions under the Paris deal.