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What does Ireland need to know about Cop26?

01st November, 2021

Eileen Rowsome, Senior Investment Analyst at Davy Private Clients, interviewed Dr. Dorothy Maxwell, Senior Director Sustainability at Davy to discuss COP26.

COP26 will be hosted in Glasgow between 31st October and 12th November 2021. The summit, delayed by a year due to the coronavirus pandemic, will bring 197 parties of the UN Framework Convention on Climate Change (UNFCCC) together to accelerate action towards the goals of the Paris Agreement: limiting global temperature rise to 1.5°C.

 

Dorothy, could you please start by explaining to us why COP26 is so important and why we should take notice of Climate Change?

COP26 will see all nations raise their ambition to tackle climate change and worsening global social inequality in line with the latest science and policy.

The publication of the sixth Intergovernmental Panel on Climate Change (IPCC) report has acted as a frightening wakeup call, concretely confirming that climate change is caused by human activity and that we must act quickly and comprehensively to combat disastrous outcomes. The likes of which we have seen in the last few months with flooding, wildfires and record high temperatures recorded around the world. The science is clear, we must limit global warming to 1.5°C to avoid the catastrophic impacts of climate change. The ways to achieve this is also clear - reduce Greenhouse Gas emissions by 50% by 2030 to reach net zero emissions by 2050, meaning making changes to reduce carbon emissions to the lowest amount and offsetting as a last resort.  

 

This sounds like a stark warning; how does the IPCC report inform policy and policy makers?

The sixth IPCC report influences the ambition for policy decisions at COP26 because of the urgency of the challenge. Each of the 197 COP member countries already set Nationally Determined Contributions (NDC)  for their annual GHG emissions, plus reduction targets. The aim for these at COP26 is to ensure they align with the ambition the climate science says we need – net zero emissions by latest 2050. To get there, countries are setting near term targets. For the EU this is a 55% reduction by 2030. For Ireland this is a 51% reduction.

The four goals for COP26 are to:

  1. Secure global net zero by mid-century and keep 1.5C degrees within reach.
  2. Adapt to protect communities and natural habitats
  3. Mobilise finance to pay for climate mitigation and adaptation needs especially in the global south that is and will continue to experience the worst of climate change impacts first. 
  4. Work together to deliver credible results.

 

In Ireland, policy makers have put together the Climate Action Plan. What is it?

The Climate Action Plan is designed to be an ‘all of government’ plan which provides a roadmap for Ireland to reduce greenhouse gas emissions and tackle the climate crisis. The first Plan was published in 2019 and is updated annually. To meet national and EU targets, Ireland will need full implementation of outlined measures to date plus additional measures to come in future plans.

 

What type of measures does the Climate Action Plan look to deliver?

Given that emissions from agriculture, transport and fossil fuels continue rise in Ireland, these will play key roles in determining the nation’s future climate impact. In order to tackle these key areas of our emissions profile, the strategic building blocks of a transition to carbon-neutral Ireland include:

  • An energy system built on wind and other renewables with a move towards 70% renewable electricity by 2030. Rapid development of Ireland’s renewable electricity sector has allowed 40% of the electricity consumed in Ireland to be renewably sourced in 2020
  • A sustainable transport system to serve economic, societal and environmental with a shift to electric vehicles and providing low emissions public transport
  • An agri-food sector working within a carbon-neutral system of agriculture, forestry and land use brought about through changes to livestock management, increased afforestation and better management of peatlands

 

They sound like ambitious and transformative measures. How is Ireland’s Plan aligned with COP26 goals?

Through the signing into law of the Climate Action and Low Carbon Development Bill 2021, Ireland is now on a legally binding path to net zero emissions by 2050, with a target 51% reduction in emissions by the end of the decade.

Ireland will be in attendance of COP26 following the Dublin Climate Dialogues climate conference which aimed to scale up ambition in the run up the COP26. Dublin Climate Dialogues, attended by US Climate envoy John Kerry and members of the UN and EU, concluded with the signing of the Dublin Declaration which called for global commitment to phase out coal power generation by 2025, quadrupling installed renewable energy, rapid electrification of the global economy and an end to investment in fossil fuels.

The outcomes of this are alread being seen with the recent announcement of changes to domestic solid fuels that will come into place next month, with the most polluting fuels being taken off the Irish market.

 

What is happening on the world stage and what role is Ireland expected to play?

Global players are expected to step up in climate ambition at COP26 and over 75% of global GDP is now committed to a Net Zero Emissions by 2050 target. The USA has re-entered the conversation with the Biden administration and is publishing climate laws that will require mandatory climate reporting. The USA has committed to a 50-52 % Reduction Greenhouse Gas Pollution by 2030. China is also expected to lower carbon intensity by over 65% in 2030 compared to 2005 levels and will reveal key plans to decarbonise certain key industrial sectors.  

Ireland is also stepping up with the Climate Action Plan and associated policy, legislation and carbon budgets providing the roadmap to help Ireland achieve its de-carbonisation goals across all sectors of the economy – farmers, businesses, government and civil society. Five yearly economy-wide carbon budgets from 2021 and market instruments, including an increasing carbon tax (to circa €100 per tonne by 2030), aim to incentivise behaviour change and make carbon abatement more profitable. The intent is to reach climate targets while creating jobs and sustainable growth in new sectors.

The first carbon budget due end Oct 2021 already has some ambitions sectoral targets including:

  • Agriculture faces GHG emissions cuts of 21-30 per cent but a Government commitment to reduce levels of “methane gas under an international EU-US pact means decarbonisation in the sector will have to be at, or close to, the higher figure.
  • Transport and housing have been set target ranges of 45-55 per cent, while carbon-intensive industry will need to cut emissions by 40-50 per cent.
  • Land use and the forestry sector will be separate to agriculture, i.e., given its own targets for carbon removals through planting trees and rewetting of peatlands. Land use is challenging because it is a significant net source of emissions, generating 5 million tonnes of carbon dioxide a year.

 

There is also plenty happening on the EU level, could you please provide some insights there?

The EU’s “Fit for 55” package will provide €72.2 billion of funding to member states for the period 2025-2032 for “climate action social fund” to reduce carbon emissions within the EU by 55% by 2030. The package covers all sectors and holistic approach to creating a road map to sustainability in the EU and a just transition. There is a huge opportunity for Ireland here to utilise the funding to tackle reduction in the most carbon intensive sectors of our economy but also to utilise the opportunities for carbon sequestration where Ireland could be an EU leader due to our unique bogland landscape. As a leader in the pharmaceutical, agricultural and technology sectors – in particular renewable and grid energy technology, Ireland needs to step up and show the way on a global stage.

 

What does COP26, and its likely consequences mean for businesses?

Climate change is arguably the biggest business risk and opportunity of all time. Global CEOs are already facing the reality that only through preventing the crisis can they have business continuity. Therefore, businesses of all sizes should pay attention to the decisions made at COP26 as they will have several outcomes that may impact on their current and future operations. These include:

  • Increased consumer awareness and demand for sustainable products and services.
  • Increased interest from employees in working for a sustainable company.
  • Increased investment in green assets and the development of the green finance market will increase the flow of capital towards greener organisations.
  • Increased expectation from voters on climate action from governments.
  • Increased number of climate related legislation and regulation. For example, implementation of the Paris Agreement and mandatory climate risk disclosure.
  • Increases in innovation from business models adapting to a low carbon society.

 

So much of what we have discussed feels a little out of our control and in the hands of policy makers and regulators, what can we do as individuals in our ever day lives?

In order to deliver on the goals of the COP26 talks, to phase out coal power and achieve net zero carbon by 2050, everyone needs to play their part. Many of us are already aware of the actions that are required to live more sustainably such as buying less and buying better, switching to renewable energy tariffs, using electric vehicles or public transport or even working from home. Increasing our awareness of our personal carbon footprints and demanding better environmental information from retailers, manufacturers and businesses that we interact with on a day-to-day basis will help contribute to achieving the goals of COP26 and limiting the impacts of climate change.

The shift to a lower economy is not all about sacrifice. Numerous positives exist in the transition to our low carbon future such as increased demand for sustainability talent, as evidenced by new college courses dedicated to sustainability and greater business innovation opportunities.

 

Thank you so much Dorothy for all the insights you have provided to help us understand COP26 and its implications for Irish businesses and individuals. There is no doubt we have a challenging but exciting time ahead as we transition to a greener economy.

 

At Davy, we have been providing sustainable investment solutions for clients for some time and our expertise in this area is ever evolving. Please speak with your Davy Adviser for more information on any of our sustainable investment services. 

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