The UK is to become a net zero-aligned financial center, making it mandatory for companies to publish net zero transition plans overseen by an independent taskforce, UK Chancellor of the Exchequer Rishi Sunak said Nov. 3 at the UN Climate Conference in Glasgow.
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The statement came as a global coalition of financial institutions, the Glasgow Financial Alliance for Net Zero, said the sum of global capital committed to achieving net zero greenhouse gas emissions had grown to over $130 trillion.
"Investors need to have as much clarity and confidence in the climate impact of their investments as they do in the traditional financial metrics of profit and loss," Sunak said.
Corporate transition plans are critical to ensuring pledges turned into action, the UK government said in an accompanying note.
A taskforce would bring together industry and academia with regulators and non-government organizations to develop a "gold standard" for UK company transition plans and associated metrics, coordinating with international efforts under the GFANZ and others, and reporting by the end of 2022, it said.
The Chancellor also said the UK would commit GBP100 million ($136.53 million) to the Taskforce on Access to Climate Finance, "making it quicker and easier for developing countries to access the finance they need."
And it would support a new capital markets mechanism, issuing "billions of new green bonds here in the UK, to fund renewable energy in developing countries," he said.
$1 trillion a year
In a panel session after Sunak's speech, Mark Carney, the UN's special envoy on climate action and finance, said flows of climate capital to the emerging and developing world needed to scale up by an extra $1 trillion a year.
"There are 24 very worthy essential [financial] plumbing reforms that we look to deliver for COP26, but the 25th is what the Chancellor just announced – mandatory net zero transition plans," he said.
"We need blended [public/private] finance facilities that mobilize multiples, in double digits, of the public dollars available."
These facilities are beginning to emerge, but those that did not amount to $100 billion/year in additional flows were "quite frankly not relevant to the scale of the problem," he said.
The final piece of the puzzle was validation or "kitemarks" for projects in the emerging or developing world proving alignment with national net zero strategies, he said.
Managing Director of the International Monetary Fund Kristalina Georgieva said integrating a cost on carbon into mitigation strategies was "enormously important".
"Last year only 17% of emissions were covered by a carbon price," she said. "This year we are edging towards 25%. Today the average cost of carbon is $3/mtCO2. By 2030 we need to be at $75/mtCO2 at least."
Carbon allowance prices under the EU Emissions Trading System rallied to an all-time high of Eur65.77/mt Sept. 28.
Volumes in China's new carbon market, focused solely on power generators in a first phase, have picked up in recent weeks, with prices relatively stable around $6-$7/mtCO2e.
In the voluntary carbon markets, S&P Global Platts assessed CORSIA-eligible carbon credits at $7.15/mt CO2 equivalent Nov. 2, compared with just 80 cents/mt when the assessment was launched on Jan. 4, 2021.
In an interview on the UN's climate website, Carney said the vast majority of carbon offsets would flow to emerging and developing economies for reforestation, nature-based projects and development of renewables, "potentially on a scale of $100 billion plus a year for parts of the world that need it the most."