Following two weeks of negotiations between delegates from 197 countries, on Friday, November 13, 2021, COP26 concluded in Glasgow, Scotland, culminating in the release of the final COP26 decision, now known as the Glasgow Climate Pact.
The Glasgow Climate Pact reaffirms the goal to limit global warming to 1.5?C and emphasizes the role of multilateralism in addressing climate change and its impacts. Additionally, the Glasgow Climate Pact notes the loss and damage that climate change has and will increasingly cause—a first, as previous decisions have not directly addressed loss and damage caused by climate change. Along with the mention of loss and damages is a call for collaboration across the private sector, multilateral development banks and financial institutions to enhance finance mobilization in order meet the need for resources required for adaptation.
For the first time in COP history, the Glasgow Climate Pact explicitly references the role of fossil fuels in the climate crisis. Initially the Draft COP decision, published November 10, 2021, asked governments to accelerate the phasing-out of coal and subsidies for fossil fuel. A focal point of negotiations, that language has been altered and now calls upon parties to "accelerat[e] efforts towards the phasedown of unabated coal power, and phase-out of inefficient fossil fuel subsidies...".
The Glasgow Climate Pact:
- calls upon multilateral development banks, other financial institutions and the private sector to enhance finance mobilization in order to deliver the scale of resources needed to achieve climate plans, particularly for adaptation, and encourages Parties to continue to explore innovative approaches and instruments for mobilizing finance for adaptation from private sources;
- reaffirms the long-term global goal to hold the increase in the global average temperature to well below 2?C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5?C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change;
- recognizes that limiting global warming to 1.5?C by 2100 requires rapid, deep and sustained reductions in global greenhouse gas emissions, including reducing global carbon dioxide emissions by 45 percent by 2030 relative to the 2010 level and to net zero around mid-century, as well as deep reductions in other greenhouse gases;
- calls upon Parties to accelerate the development, deployment and dissemination of technologies, and the adoption of policies, to transition towards low-emission energy systems, including by rapidly scaling up the deployment of clean power generation and energy efficiency measures, including accelerating efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies, while providing targeted support to the poorest and most vulnerable in line with national circumstances and recognizing the need for support towards a just transition;
- urges the operating entities of the Financial Mechanism, multilateral development banks and other financial institutions to further scale up investments in climate action, and calls for a continued increase in the scale and effectiveness of climate finance from all sources globally, including grants and other highly concessional forms of finance;
- acknowledges that climate change has already and will increasingly cause loss and damage and, as temperatures rise, impacts from climate and weather extremes, as well as slow onset events, will pose an ever-greater social, economic and environmental threat; and
- urges developed country Parties, the operating entities of the Financial Mechanism, United Nations entities and intergovernmental organizations and other bilateral and multilateral institutions, including non-governmental organizations and private sources, to provide enhanced and additional support for activities addressing loss and damage associated with the adverse effects of climate change.
What Does This Mean for Canada?
COP decisions are integral to the development and implementation of the Paris Agreement. When COP decisions are adopted, there is a legitimate expectation of compliance from parties to the United Nations Framework Convention on Climate Change (UNFCC), of which Canada is one.
Further, as part of the Paris Agreement, countries must update their nationally determined contributions (NDCs) plans setting out how a particular country plans to reduce emissions, every five years. NDCs were due in 2020 when COP26 was originally supposed to take place, however, due to the delay caused by the Covid-19 pandemic, countries were given the opportunity to prepare updated NDCs. In particular, Canada's updated 2021 NDC includes the commitment to reduce emissions by 40-45 percent below 2005 levels by 2030, an ambitious increase from Canada's original NDC, as well as the commitment to reduce its emissions to net-zero by 2050. Further, Canada's NDC commitment to power rural, remote, northern and Indigenous communities with reliable and clean energy by 2030 aligns with the Minister of Natural Resources' recent announcement of Canada's new partnership with International Renewable Energy Agency to support the transition to renewable energy in remote communities.
Canada's updated NDC, as well as the commitments made in the Glasgow Climate Pact, will impact the steps that Canada and its regulators will take to address climate change going forward.
Regulatory and Legislative Changes
Among those steps include the recent developments within Canada's securities regulatory authority, the Canadian Securities Administrators (CSA), which signal that Canada, and its regulators, are taking action in line with the commitments under the Glasgow Climate Pact. Specifically, the recently published proposed National Instrument 51-107: Disclosure of Climate-related Matters (NI 51-107), (of which a more detailed overview can be found in our previous insight, Proposed New Climate-Related Disclosure Requirements) responds to calls from investors to standardize climate-related disclosures, as well as a growing convergence among regulators and investors to align disclosure with recommendations made by the Taskforce on Climate-related Financial Disclosures (TCFD). The proposed rules reflect a larger awareness of the financial sector's increasingly vital role in addressing climate change through climate-related disclosure, and are expected to come into force sometime after December 31, 2022.
Specific pledges made by Prime Minister Justin Trudeau in the weeks leading up to and during COP26 indicate that regulatory oversight on climate change matters will continue to increase, posing further constraints on the private sector going forward, including:
- capping and reducing emissions from the oil and gas sector to net-zero by 2050, including five-year targets and a "meaningful" contribution from the sector to meeting the 2030 emissions target for Canada;
- ending exports of thermal coal by no later than 2030;
- requiring the sale of zero-emission cars and establishing a net-zero emissions electricity grid by 2035; and
- reducing oil and gas methane emissions by at least 75 percent below 2012 levels by 2030.
The pledges go beyond existing policy, have significant ramifications for the energy industry in particular, and will require significant engagement with provinces and industry on matters of detail and implementation.
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