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COP26 and Clean Power: Are There Signs of a Green Recovery?
Despite the relatively short-term urgencies flagged by the coronavirus pandemic, many of us have an eye on the long term future. A green recovery proposition urges nations worldwide to rebuild their economies by prioritising clean power, new employment prospects, and eco-friendly industrial practices.
Six years after the landmark 2015 Paris Agreement was signed, COP26 is taking place. It aims to hold nations accountable for their ambitious pledges to reach net-zero emissions by 2050. In the build-up to this conference, a range of exclusive virtual events hosted by the United Nations (UN) and the International Energy Agency (IAE) have highlighted the importance of a speedy transition to clean power.
Since many powerful governments have pledged to support renewable energy initiatives in the long term, now is the ideal time for prospective investors to participate in the modern energy revolution. The atmosphere is electrifying, as clean energy offers a chance to make money and make a positive difference in the world.
Since the onset of the COVID-19 pandemic (and the COVID-triggered recession), governments around the world have become more vocal about tackling climate change. In fact, it’s a cause that has inspired many of us to speak up in our homes, workplaces, and communities. While national authorities operate within set boundary lines, global warming cannot be contained within a single territory. Since climate change threatens the world at large, we must establish a sense of shared responsibility to protect the future of our planet.
As individuals, we’re encouraged to be conscious consumers, and adopt eco-friendly lifestyles wherever possible; recycling waste and supporting local produce are two small examples of eco-friendly living. As investors, we can choose to support green investments. On a systemic scale, policies play an enormous role in defining our mutual goals and putting them into action for the greater good. So, what is a ‘green recovery’? Hypothetically, it’s a worldwide post-COVID-19 plan that implements environmental, economic and regulatory changes to help us flourish. Sounds great, right?
A green recovery prioritises economic growth and environmental impact. It aims to accomplish these goals productively and profitably. Alongside reducing fossil fuel consumption, there is talk of creating millions of new jobs and optimising the transport industry in line with sustainable goals; However, these plans need to be formalised before they can have an impact. You’re not alone if you’ve ever found yourself asking: are there signs of a green recovery coming into effect any time soon?
This article will review some critical discussions surrounding the 26th United Nations Climate Change Conference (aka. COP26) and clean power.
Recap: What is the Paris Agreement?
The Paris Agreement rallies collaborative international efforts to limit global warming and achieve carbon neutrality by 2050.
The Paris International Climate Agreement is an iconic and legally binding treaty between 195 nations – including Canada, the United States, and the United Kingdom. Signed in December 2015 at COP21, this treaty holds each participating country accountable for one common objective: reducing greenhouse gas emissions as rapidly as possible. This mission ultimately aims to prevent the Earth’s temperature from rising any higher than 1.5 degrees celsius due to global warming. According to experts at NASA, a temperature rise of 2 degrees or more could result in catastrophic environmental devastation: annual heatwaves, water shortages, habitat loss, oceanic ‘dead zones’, and more. All in all, we can’t afford a ‘slow burn’ approach where eco-friendly ideas are concerned.
The Paris Agreement rallies collaborative international efforts to limit global warming and achieve carbon neutrality by 2050. To make these ambitions possible, economies and societies must change radically. Since the Paris Agreement is cyclical, it is due to ‘upgrade’ every five years – embracing bolder and more efficient environmental initiatives along the way.
This treaty places more financial responsibility on developed countries that can lead the way and support vulnerable nations in the transition to sustainable and accessible power. It also calls for energy finances to be better-regulated – since significant investments will be necessary in order to achieve these goals quickly. As you may know, the Canadian government has already committed to:
- Maximise public transport services while minimising carbon footprints
- The ongoing deployment of renewable energy solutions
- Installing more electric car charging stations
- Investing in clean technologies
While the official COP26 conference is scheduled for November 2021, some associated events have helped to build momentum as leaders prepare for critical decisions in the road ahead.
COP26 Virtual Roundtable on Clean Power Transition
Many utility-scale corporations will need to upscale their 2015 output by up to 300% to support a speedy global transition to green power by 2050.
In January 2021, the UN hosted a COP26 virtual roundtable discussion dedicated to accelerating the global shift from non-renewable energy to sustainable and affordable power. This event explored the international coalition towards carbon neutrality (and net-zero emissions) by 2050 – as stated in the Paris Agreement.
Here, leaders from government bodies and the private sector alike discussed the urgent need for all parties to demonstrate an unwavering commitment to mutual climate goals. Many speakers recommended enforcing more severe carbon taxes and ending fossil fuel subsidies, along with investing in renewable energy companies and the development of clean technologies.
During this recorded 70-minute roundtable event, green energy representatives suggested that many utility-scale corporations will need to upscale their 2015 output by up to 300% to support a speedy global transition to green power by 2050. Currently, these projects involve solar panels, wind turbines, batteries, and many other renewable energy assets. Consequently, the global clean power transition requires a substantial increase in funding. Governments, investors, private financial institutions, and multilateral development banks (MDBs) all have a part to play. Experts called for an accelerated clean energy trajectory in the private sector, revamped market design, and better regulations.
Speakers at the COP26 Virtual Roundtable on Clean Power Transition also raised another critical issue: millions of people worldwide still do not have access to electricity. Thus, global efforts to make energy sustainable must work hand-in-hand with initiatives that provide low-income countries with reliable access to power. As International Energy Agency Executive Director Fatih Birol stated during his roundtable speech: “the climate challenge is an energy challenge.”
The IEA COP-26 Net-Zero Summit: Key Points
O’Regan summarised that 64 new climate measures are on the horizon in Canada – funded by $15 billion.
On 31 March 2021, the International Energy Agency (IEA) presented an iconic virtual conference assembling worldwide energy and climate leaders from over forty countries. Representatives from private corporations and civil society groups were also present – along with government ministers. This event explored COP26 and clean power from an industrial perspective.
This summit consisted of five separate panels that we will briefly summarise below:
- Valuing people and the environment
Representatives reiterated that the clean power transition is about people, livelihoods, and broader society. In this recorded online panel published on the official IEA YouTube page, speakers discussed energy inequality, employment, and cultural challenges. They reflected on the need to help countries that are currently solely dependent on fossil fuel profits. Additionally, they stressed the importance of using green energy to generate millions of jobs, and ensuring that people who lose their jobs from the fossil fuel industry will be re-employed within the renewable energy sector.
- Speeding up implementation processes
When it comes to the international response to climate change, time is of the essence. Guest speakers at the IEA COP26 Net-Zero Summit stressed that energy systems and regulatory frameworks need to align with global sustainability goals and deadlines. These initiatives involve developing solid legal frameworks, resource management, and increasing government clean energy funds in collaboration with private investors.
- Boosting green energy breakthroughs and technology
The development of innovative solutions and clean technology advancements impacts both the efficiency of renewable energy systems (including power storage) and the costs associated with them. In this virtual panel, leaders called for increased investments in mastering sustainable technologies and suggested that this is an impactful way to put shared climate goals into action. They also emphasised the value of unifying energy sector pathways, inviting creative input from ‘smaller’ countries, and proactively reaching out to private investors.
- Maximising clean energy investment opportunities
The Honourable Seamus O’Regan (Canada’s Minister of Natural Resources) co-hosted this IEA COP26 conversation. In his opening speech, he highlighted the importance of making renewable energy cost-competitive – turning fossil fuel companies green with envy. He advocated for decarbonisation policies, carbon-pricing schedules, and long term sustainable investments at a governmental level. O’Regan summarised that 64 new climate measures are on the horizon in Canada – funded by $15 billion. He also emphasised that today’s energy investors are seeking meaningful and environmentally-conscious assets rather than profits alone.
- Assurance that countries will walk-the-talk
Understandably, there is a big difference between words and actions. During this final panel, leaders stressed that we are on the cusp of an industrial revolution (both digitally and environmentally). Among many other things, they mentioned the importance of establishing trust between nations so that people can share energy between borders.
What to Expect From COP26
At COP26, developed countries aim to mobilise $100 billion in annual climate funds, work cooperatively, and clarify 2030 emissions targets.
Before COP26 occurs, events such as The Youth Summit and Pre-COP Milan will support further discussions with young people and delegates regarding the global climate change response. The COP26 conference will operate with four primary goals: mitigation, adaptation, finance, and collaboration. It aims to put the Paris Agreement into full action and impart a strong sense of accountability and commitment to achieving sustainable growth. In tandem with this goal, parties will negotiate their stances within the United National Framework Convention on Climate Change (UNFCCC) and other vital treaties.
At COP26, developed countries aim to mobilise $100 billion in annual climate funds, work cooperatively, and clarify 2030 emissions targets. Furthermore, there will be an emphasis on protecting ecosystems and habitats. The decisions made during COP26 will have an enormous impact on all possibilities of a future ‘green recovery’.
Are There Already Signs of a Green Recovery?
50% of all professionally managed assets may be ESG-mandated (i.e. environmentally, socially, and governmentally conscious) by 2025.
At the beginning of this article, we defined a green recovery as a climate-centred approach to ‘bouncing back’ from the economic recession triggered by the COVID-19 pandemic. According to the Organisation for Economic Co-operation and Development (OECD), over 80% of global COVID-19 recovery funds have a neutral or detrimental impact on the environment – even though over $336 billion has been put aside for green ventures. Suffice it to say; we have a long way to go if we want to reach carbon neutrality by 2050.
A green recovery is not only about levelling the playing field between renewables and fossil fuels. Instead, it’s about allowing clean energy to come out on top in a way that benefits everyone.
Thankfully, governments are addressing these issues and have expressed willingness to reach out to private investors to achieve mutual profits. As far as investments are concerned, the road ahead looks lucrative. Experts at Deloitte predict that 50% of all professionally-managed assets may be ESG-mandated (i.e. environmentally, socially, and governmentally conscious) by 2025. And that’s just in the USA.
So far, the COVID-19 pandemic has taught us that countries can cooperate in the rapid pursuit of mutual solutions. In the build-up to COP26, panels and roundtables have demonstrated that many international leaders recognise the need for urgent change, and are determined to make the world a cleaner, greener, and ultimately more prosperous place. Anticipations are high for COP26 and the critical negotiations it will facilitate. To stay true to their pledges, governments will have to ‘up the ante’ in their efforts to reduce fossil fuel emissions and boost clean power.
This financial climate is a phenomenal opportunity from an investment standpoint – since the road to a green recovery has economic growth and global GDP at its core.
Frequently Asked Questions (FAQs)
What is COP26?
COP26 is the 26th edition of the UN’s Climate Change Conference of the Parties (i.e. COP). It is an international conference that aims to mobilise the global responses to the climate crisis from a place of unity. COP26 will focus on putting sustainability plans into swift legal action to reduce greenhouse gas emissions. In other words, it will pave the way in the journey towards a green recovery.
When is COP26?
COP26 will take place between the 1st and 12th of November 2021. Its official host city is Glasgow, Scotland.
What are the main benefits of a green recovery?
As we know, climate change is an international issue that cannot be contained within national boundary lines. A green recovery would allow different countries to join forces in the race to beat global warming. This concept supports globalisation and clean power initiatives to provide sustainable and affordable power from an economic perspective. It would also provide employment, generate profits, and protect our planet from being damaged beyond repair.
Are people in favour of a green recovery?
Many international leaders support the idea of a green recovery. However, the process of transforming it into reality is incredibly complex, and involves a great deal of negotiation, foresight, and commitment from all parties. COP26 should be a monumental moment that maps out the road ahead. Scores of investors are already taking the initiative by expanding their green and ESG investing portfolios.
How will a green recovery affect investing in green energy?
According to the COP26-themed discussions we reviewed in this article, many international leaders have shared the long term intention to fund renewable energy projects, green transport, and innovation in clean technology. As a result, you may be able to reap impressive rewards from investing in these specific sectors within the green energy movement. There are many different ways to get involved, from solar energy stocks to renewable mutual funds.