COP26: taking the Paris Agreement a step further

COP, or Conference of the Parties, is the decision-making body of the UN Framework Convention of Climate Change (UNFCCC), an international treaty on climate change that was introduced at the 1992 Earth Summit, along with the Convention on Biodiversity.

In principle, the COP meets every year, although in 2020 no COP was held due to the Covid-19 pandemic.

COP26 will run from 31 October until 12 November. It will focus on a range of topics aimed at securing the goals of the Paris Agreement, adapting to the changing climate, mobilising finance towards climate change mitigation and adaptation, and facilitating collaboration. This includes:

• The world leaders summit (1-2 November)
• Finance (3 November)
• Energy (4 November)
• Youth and public empowerment (5 November)
• Nature (6 November)
• Adaptation, loss and damage (8 November)
• Gender (9 November)
• Science and innovation (9 November)
• Transport (10 November)
• Cities, regions and built environment (11 November)

_{What is the Paris Agreement?}

At the historic Paris Climate Change Conference (COP21), on 12 December 2015, 196 countries came together for the first time ever to adopt a legally binding treaty on climate change, which became known as the Paris Agreement. This Paris Agreement entered into force on 4 November 2016.

The Paris Agreement’s main aim is to limit the global temperature increase to well below 2 degrees Celsius above preindustrial levels, and to pursue additional efforts to limit the rise to only 1.5 degrees Celsius. It also aims to increase countries’ ability to adapt to the adverse impacts of climate change, and to foster climate resilience and low greenhouse gas emissions development, while making finance flows consistent with those aims.

_{Nationally determined contributions}

At the heart of the Paris Agreement are the “nationally determined contributions” (note, not commitments) (NDCs) as the central mechanism to achieve the Paris Agreement objectives.

The NDCs should include each country’s plans to address mitigation, adaptation, finance, technology transfer and capacity building. Developed countries are asked to take the lead by undertaking economy-wide absolute emission reduction targets, while developing countries are encouraged to move toward economy-wide targets in the light of different national circumstances. Additionally, countries have to set increasingly ambitious goals in their successive NDCs.

All 191 Parties have submitted NDCs and, in the run up to COP26, many countries published recently reviewed NDCs (with China as a notable exception), with varying levels of ambition. These range from “net zero ambitions” (reduction from the level in a specified base year by a given date) over relative targets for reducing emissions below the “business as usual”, to unquantified reductions.

Next to the NDCs, the Paris Agreement invites countries to adopt long-term low greenhouse gas emission development strategies. These strategies provide a long-term horizon to the NDCs, helping countries to plan for the long-term goal of the agreement.

_{Financial resources}

In order to limit global warming, countries have agreed to provide financial resources. The Paris Agreement recognises that poor, developing countries have less capacity to tackle climate change and are more vulnerable to the impacts of global warming. That is why developed countries have committed to provide financial resources to assist developing countries with the implementation of mitigation and adaptation measures, known as “the USD100 billion pledge”. Despite many declarations, the developed countries currently fall short of this annual pledge. Developing countries are encouraged to provide financial support on a voluntary basis.

_{New trading instruments}

Countries that struggle to meet their emissions-reduction targets under their NDCs, or want to pursue less expensive emissions cuts, can purchase emissions reductions from other nations that have already cut their emissions more than the amount they had pledged, such as by transitioning to renewable energy.

If the rules are structured appropriately, the result can be a win-win for everyone involved — both countries meet their climate commitments, the overachiever is financially rewarded for going above and beyond, finance is provided to the country generating the emissions reductions, and the world gets a step closer to avoiding catastrophic climate change. Article 6 of the Paris Agreement established these concepts in broad lines, but until now the process of defining the rules and their final shape remains yet to be agreed. Finalising these rules is a key agenda item for COP26.

_{Further key instruments}

In addition to the overall goal-setting, backed-up with NDCs and the financial resources to meet those, the Paris Agreement provides frameworks for technical and capacity-building support to those countries who need it. The parties aim to fully realise technology development and transfer, in order to improve resilience to climate change and to reduce greenhouse gas emissions. Also, the Paris Agreement aims to ensure that developing countries have sufficient capacities to deal with the challenges of climate change (e.g. for implementing adaptation and mitigation actions), asking that developed countries enhance support for this.

_{Transparency framework}

While the Paris Agreement does not set penalties for countries failing to meet their targets, the agreement does establish a transparency framework to provide a clear view of the measures taken by countries to tackle climate change, with built-in flexibility that takes into account their differing capabilities. Under this transparency framework, countries must, in essence, report transparently on actions taken, progress made, and support provided or received.

Under the Paris Agreement, each country has to submit its NDC every five years, with the first deadline being 2020. COP26 will be the first time since the Paris Agreement was approved that world leaders will meet face to face to discuss their (new and updated) NDCs.

We will be discussing developments at COP26 and their implications for business throughout and following the conference. Please register for our Countdown to COP & Beyond blog for our insights on this landmark conference.

Authors: Gauthier van Thuyne, Jochem Spaans and Kelly Sporn