Significant progress was made on several fronts at the COP26 climate summit in Glasgow last month, such as shifting away from fossil fuels, tackling methane emissions, and protecting nature and biodiversity. However, the world still has a long way to go in the years ahead. Here are some highlights on progress made and areas that still need some work.
1. Public funding and private financing must connect
Financial institutions representing trillions of dollars have committed to tackling climate change but getting that money to the right place remains a major challenge. The vast majority of private sector climate financing today goes to developed countries and proven technologies, even though early-stage technologies and developing markets will need some of the biggest investments to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit).
2. Governing carbon markets
Countries reached a deal on Article 6 of the Paris Agreement, which will govern international carbon markets and ensure emissions reductions are not double-counted among countries. The agreement could also foster growth in voluntary carbon markets where companies buy carbon credits to help meet their net-zero goals.
3. More than 100 countries pledge to end deforestation
Pledges to preserve or restore nature as part of addressing climate change garnered more attention at COP26 than in past years, particularly on the issue of stopping deforestation. More than 100 countries, including Kenya, Brazil, China, Russia and the US pledged to end deforestation by 2030. And more than 30 financial institutions with more than $8.7 trillion in assets under management committed to phasing out deforestation from their commodity portfolios by 2025.
4. Climate commitments require more accountability
We saw progress at COP26 in terms of government agreements and private sector pledges. However, there is a need to strengthen accountability. For example, nearly 200 nations agreed to “phase down” coal-fired power plants and most fossil fuel subsidies. These nations also pledged to set more ambitious emission reduction targets just a year from now, instead of in a handful of years when the next set of country pledges are due. But countries need to follow through on those commitments with related policies and programs, and companies and investors need consistent standards for tracking progress toward those pledges.
5. A focus on buildings’ carbon intensity
While much of the focus at COP26 was on moving away from fossil fuels, emissions from the construction sector remain a key challenge yet to be fully addressed at the government and private-sector levels. Existing buildings and new construction are the source of nearly 40% of global energy-related carbon emissions and use up half of all extracted materials, according to the World Green Building Council, a U.S. nonprofit group. But knowing whether COP26 helped move the needle on this issue will likely become clearer in the coming years as governments move to decarbonize across all aspects of their economy.