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The market is excellent at figuring out how to do things.
Then, the market mechanisms of consumer and investor choice and technological innovation can get to work on figuring out how to do those things in the most cost-effective, efficient, consumer-friendly ways – in this case by producing affordable, practical, desirable electric vehicles.
Ahead of the 2021 United Nations Climate Change Conference and at the summit itself, 151 countries submitted new emissions reduction plans, including Australia, Canada, and the US1.
But with only 66 of the net-zero pledges made at COP26 backed up by law or policy5, and the lack of credible roadmaps from several major emitters, the actual level of warming could be even higher should some countries fail to deliver on their promises6.
With coal being one of the most significant drivers of carbon emissions, national energy policies are an essential tool in the quest for net-zero.
Global coal consumption reduced from 45,139 terawatt-hour equivalents in 2014 to 42,062 TWh in 20207, while a 2021 analysis found a 76% reduction in the global pre-construction pipeline for new coal plants8.
Some countries may yet increase their use of coal power to plug the gap – a policy that could undo much of the progress we’ve made in recent years.
Even so, this latest commitment is backed up by money in the form of the Global Forest Finance Pledge, in which the European Union and 11 other countries promised to allocate USD 12 billion for realising the potential of forests and sustainable land use.
To see the impact policy can have on deforestation, we need look no further than Costa Rica, which, by 1987, had lost a third to a half of the rainforests that once covered about 75% of this Central American country.
In February this year, the UN took a significant step towards more meaningful global policy for addressing plastic pollution when its negotiators signed a draft resolution titled ‘End plastic pollution: Towards an internationally legally binding instrument’.
In the end, several countries announced new climate finance pledges, including Japan, which promised USD 10 billion for reducing emissions in Asia over the next five years; and the US, which pledged USD 11.4 billion annually by 2024 alongside USD 3 billion for climate adaptation.
“There is not enough for adapting to climate change, which was promised to be 50% of the USD 100 billion.”14 Furthermore, the US Congress has approved just USD 1 billion in climate finance this year, leaving a significant gap to close if the country is to fulfil its COP26 pledge15.
This year may also see the launch of a new Sustainability Disclosure Standard, currently being developed by the IFRS International Sustainability Board, that could serve as the global baseline for high-quality sustainability information for investors, policymakers and the financial markets.
At the 15th UN Conference of the Parties , where, according to Conference President-designate Sameh Shoukry, delegates will “set the stage and direction for global climate action in this critical decade.” COP27 will also have a particular focus on Africa, with hopes the conference will give fresh impetus to the continent’s expansion of renewable power.
But the transition won’t happen in a vacuum, and laws, frameworks and policy will be increasingly important in channelling the innovation needed to achieve net-zero.
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